Transcripts

"Commentary"-Recovery Signs

SUSIE GHARIB: Tonight's commentator says there are four signs to watch for when looking for an economic recovery. He's Bernard Baumohl, director of the Economic Outlook Group.

BERNARD BAUMOHL, DIRECTOR, ECONOMIC OUTLOOK GROUP: At this point there should be little doubt the U.S. is in recession with profits, jobs and spending all in serious decline. Now some forecasters say the downturn will last into 2010. Others foresee a depression ahead. Both these views are way too pessimistic. The U.S. and foreign policy makers have already showered the global economy with an unprecedented $3 trillion worth of liquidity and they are arm twisting their banks to lend again. The question now is what should we look for that tells us the U.S. economy is beginning to respond to all this stimulus? Here are four leading indicators that will do just that. First, keep an eye on housing. Both new and existing homes sales picked up recently and the inventory of unsold new homes has dwindled to the lowest level in four years. Next, watch the monthly jobs report at the end of this week and focus on temporary employment. A pick-up in temporary work is a good omen because it's a precursor to permanent hiring six months later. A third telling indicator comes from the Institute for Supply Management and looks at new orders received by manufacturers and service companies. A jump in orders will boost production and employment. One last indicator with a knack for predicting an economic recovery is the volume of paper and lumber transported by freight trains. Now these four indicators which can be tracked on the Internet were in free-fall for more than a year, but some have now begun to turn up, a sign that this economic slump could end by next summer. I'm Bernard Baumohl.