We're still in a recession, although Federal Reserve Chairman Ben S. Bernanke told Congress last week that the economy could recover later this year. n That follows earlier remarks by Bernanke that he spotted some "green shoots" of revival. n He may be right. Certainly, many people have been searching for sprouts of growth ever since the mention of "green shoots." n But Bernanke also has warned that a sustained recovery will depend on restoring stability to the financial system, and parts of that system remain under significant stress. That means these sprouts could be like my daffodils, which poke their head from the ground after a few days of unseasonably warm weather in January, only to get burned when winter returns with a vengeance. n How will we know? Economists and financial experts tell us what they're looking at to gauge an economic revival.
- Eileen Ambrose
Alan Levenson, chief economist
T. Rowe Price Associates
"The reason we are talking more about a recovery is because of what some people call 'green shoots.' I have not liked this expression. It suggests something coming out of the ground that we can see," he says. "It's a little premature. The economy is still not advancing, it's contracting." Although, he adds, the pace of the contraction has slowed. "It's good news. Things aren't getting any worse," he says. Levenson watches figures on employment, income, retail sales and industrial production to assess the economy's health. The recovery will have taken hold, he says, when production starts growing, income begins inching up, retail sales grow steadily and employment stops falling. So far, none of these is pointing in the direction of renewed growth. The stock market is often considered an indicator where the economy is headed, and stocks have been on the upswing. But Levenson warns the market isn't a foolproof indicator. Stocks appeared to hit bottom in November, for instance, but sank to another low in early March.
, Richard Cripps, chief investment officer
EquityCompass Strategies
