US Recession Over? Five Signs Bernanke May Be Right

While there are still plenty who are sceptical that the downturn has ended, a number of positive trends support Fed Reserve chief Ben Bernanke's statement that the recession has "very likely" ended, reports Ron Scherer

1 THE STOCK MARKET is acting more like a bull than a bear. The Standard 
& Poor's 500 stock index is now up 58% from its March 9 low. "Over the last 60 years, the market has bottomed a median of five months before the recession ended," says Sam Stovall, chief investment strategist at Standard & Poor's inNew York. "That would mean the recession came to an end at the end of August."

2 
NEW CLAIMS FOR UNEMPLOYMENT 
peaked on March 28 when they hit 
674,000. Now, they are down to 550,000. "Typically, after claims have peaked, the recovery is coming in 4-8 weeks," says economist Bob Brusca of Fact and Opinion Economics in New York. New unemployment claims reflect people who are getting laid off. "As the economy gets stronger, you expect fewer people (to be) getting displaced and the claims levels to drop—which they have done with regularity through the years," says Brusca. "It's a very good statistical indicator of when the recession is at its worst and when it's going to end."

3 
MANY MANUFACTURING SECTORS 
are finally turning up. On 
Wednesday, the Federal Reserve reported that industrial production rose 0.8% in August, the second consecutive monthly increase. Automobile production has been particularly strong, rising 43% in July and 12% in August. Much of the increase was related to the so-called "Cash for Clunkers" programme. The steel industry, which sells a lot of products to the auto industry, has seen production rise sharply from May to August. "There has been a big inventory swing," says Dan Meckstroth, chief economist at the Manufacturers Alliance/MAPI in Arlington, Virginia. "Usually, manufacturing doesn't lead the business cycle but it was driven down so brutally, we're getting a rebound effect," he says.

4 GASOLINE deliveries have risen for the past three months, after 
declining for over a year and a half. Although increased gasoline usage may be the result of low prices (compared with a year ago), it may also signal that more people are commuting or shopping. "It could be a sign we are moving out of the recession," says John Felmy, an economist with the American Petroleum Institute (API) in Washington.

5 DEMAND FOR FREIGHT TRANSPORTATION IS RISING,according to the Freight Transportation Services Index (TSI) put together by the US department of transportation. The index, which measures the output of trucks, railroads, inland waterways, pipelines and air freight, rose 1.6% in July. This is the first increase since February and the largest since January 2008. Over the past 25 years, an upturn in this index has been "coincident" with upturns in the economy, says Ken Notis, an economist at the Bureau of Transportation Statistics. His conclusion: improvement in TSI is consistent with the stabilisation of growth and the bottoming of Gross Domestic Product. THE CHRISTIAN SCIENCE MONITOR