5 signs of the recession’s end.

By

Elizabeth Strott.

Source: www.msn.com

(Link: http://articles.moneycentral.msn.com/Investing/StockInvestingTrading/5-signs-of-the-recessions-
end.aspx)

The economy has got to turn around soon. But how will we know when the turn has come?

Here are five key signs that we at MSN Money will be watching for, plus some extras from experts and a
couple from just plain folks eager to see some evidence of a recovery.

1) Indexes start rising.

There was a flicker of good news in February, when the Economic Cycle Research Institute's Weekly
Leading Index rose for the first time in six weeks.

The index, a composite of daily and weekly data on economic drivers of the business cycle, including
corporate profits and housing activity, is still looking pretty weak, said Lakshman Achuthan, the
managing director at ECRI, but it has stopped falling, and there has been some stabilization since mid-
December.

"When these leading indexes begin to start rising, that will be a very clear and, as importantly, a very
objective sign of a recovery," Achuthan said.

Detailed information about the institute's research is available only to subscribers, but the leading index
is frequently mentioned in news reports and is worth following as a reliable indicator of key changes in
the business cycle.

Another index worth following is consumer spending. That is already showing some signs of life.
Consumer spending constitutes about 70% of the U.S. economy. When consumers spend, the economy
grows. Consumer spending rose 0.6% in January, after a 1% decrease in December and a 0.8% drop in
November.

2) Cardboard boxes are in demand

Cargo and cardboard are two heavy-duty industrial signals to watch.

The Baltic Dry Index is an assessment of the price of moving raw materials on cargo ships around the
world. When the world economy is fading, shipping gets cheaper. When growth returns, shipping costs
more. The index has shown some improvement this year, after sinking to a 22-year low in early
December.

"In terms of a glimmer of hope, a tap has been turned," said Michael Gaylard, a derivatives broker at
Freight Investor Services.

"The fundamentals -- the raw materials needed that are paramount to infrastructure rebuilding and
investment around the globe -- they're starting to move," Gaylard said. "Once the flows that we've seen
in the past few weeks start to have some continuity to them, then the market will rebuild. The
turnaround has started, but it's going to be a long and slow process."

Former American Federal Reserve Chairman Alan Greenspan used to watch the cardboard box business
as an indicator of industrial production. About 75% of all nondurable goods are shipped in corrugated
cardboard boxes; when demand for boxes is high, that's a sign that the economy is doing well.

3) Diamonds are forever . . . again

Jewelry sales are a leading indicator of recovery in the retail sector, according to Mike Niemira, the chief
economist at the International Council of Shopping Centers.

Sales of engagement rings have been down in recent months, said Mark Aaron, the company's vice
president of investor relations.

"It's not that people don't fall in love during a recession," Aaron said, "It's whether they're making that
commitment and buying a $10,000 engagement ring and making wedding plans.

"When people start to feel a little more secure about their jobs, when the stock market starts to
stabilize, that might be enough to help restore confidence. If we see greater interest in the big-ticket
items and a pickup in store traffic, that will be encouraging."

4) Restaurants are bubbly

A New York restaurateur Keith Treyball said he has seen some pullback among his customers. He said
he'll know the recession is ending when the most-affluent diners stop ordering the $150 bottles of wine
they've been drinking lately and start ordering the $300 bottles they drank when the economy was
stronger.

Some restaurateurs have already seen signs of recovery.

Valentine's Day, traditionally a big one for restaurants was even bigger for Wolfgang Puck's restaurants
this year: Sales were up 25% across the board, said Tom Kaplan, the senior managing partner of
Wolfgang Puck's Fine Dining Group.

Some in the restaurant business see sales of Champagne as a leading indicator. If you buy that, there's
hope, as bubbly remains very popular at hip bars, nightclubs and hotels, said Stephen Brauer, the
general manager of wines and champagnes at Pernod Ricard.
5) Little splurges are back in style

Strong sales of small indulgences demonstrate that people still like to treat themselves and may soon
be ready to move on to bigger treats.

Our own economic indicators

Other people said they'd know a recovery was coming when they:

 Upgraded to a bigger flat-screen television.

 Saw lawyers working until 2 a.m. again.
 Replaced generic dog food with organic brands.
 Bought Starbucks lattes again.
 Rejoined a gym and purchased sessions with a personal trainer.
 Had more trouble catching a cab in New York City.
 David Zelman of housing research firm Zelman & Associates says he'll know the recession is over
when he stops watching CNBC all day.