Has the Recession Hit Bottom?

Executives and policymakers believe that the recession has reached its bottom, and that we might begin moving out of the downturn. Indeed, economic indicators from July show that, overall, things are improving. The index used is the Leading Economic Index. This index is reported by the Conference Board, which is made up of executives from around the world. In the world of high corporate finance, it appears that things are evening out.

Here are the 10 components that make up the Leading Economic Index, and how they did in July:

1. Interest rate spread (increased)
2. Average weekly initial jobless claims (increased)
3. Average weekly manufacturing hours (increased)
4. Index of supplier deliveries (increased)
5. Stock prices (increased)
6. New orders for nondefense capital goods (increased)
7. Consumer expectations (decreased)
8. Real money supply (decreased)
9. Building permits (decreased)
10. Manufacturers’ new orders for consumer goods and materials (held steady)

The news provides a basis for the idea that the recession may have bottomed out. However, it is important to realize that just because the recession has bottomed out doesn’t mean it is over. And even when the recession is over (as declared by the National Bureau of Economic Research), it doesn’t mean that recovery is complete. In fact, the end of the recession merely marks the beginning of the economic recovery.

It is a good idea to consider this, and prepare your business to ride out what’s left of the recession, and be aware that economic recovery may take months — or even years — once we are out of the recession.

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