Monday, August 23, 2010

FinancialEdge: The 6 Signs Of An Economy Recovery

It is rare to hear any long discussion of the stock market without some mention being made of the economic outlook. As of mid-August of 2010, the preeminent worry is whether the U.S. economy is sliding back into recession or whether it will manage to sustain an ongoing (if weakened) recovery.

Given that the economists on business TV seem to live to disagree, what should a regular investor do? Just what should an economic recovery look like? Follow these economic indicators for signs of a recovery.

It is difficult to talk about an economy in recovery if people are not getting back to work. There are such things as "jobless recoveries", where there is enough economic activity to get businesses moving again, but not enough to stimulate hiring.

In most other cases, however, investors are right to correlate an improving economy with people getting back to work. The reported unemployment rate, then, is often given a great deal of weight by observers. Keep in mind, though, that unemployment data is not always reliable in the early stages of a recovery - the quirks of the statistical method's use exclude those who have abandoned the search for work, but when a recovery seems plausible, some of these people resume their search and count once again among the unemployed.

To read the piece, please click below:

I kind of wish my editor had run this as "Six Signs", and not "*The* Six Signs", as I am sure I will hear from somebody who objects to my list...

No comments: