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There will be quite a few recovery-based articles printed here in the next few months. That way every one of the readers here can also learn more about what will be written here by this writer in the next few months, what to look for as we get better, or be given a pleasant, basic refresher course in macroeconomics. Unfortunately, yesterday was not a day worth analyzing due to the detailed closure of the complete United States financial system for Memorial Day. We will not have the concluding report from Wall Street or anything until 4:00pm eastern time today.

Everybody knows that a recession is a wide-ranging slowing of economic movement over a continued period of time or portion of a business round, mostly if Gross Domestic Product (GDP) is down for two quarters. During a recession, a lot of economic indicators will be different in the way they respond, but all will fall relatively. This includes manufacture as measured by Gross Domestic Product (GDP), employment (called joblessness during ruthless economic times), investment spending, capacity utilization, household incomes and business profits. This is simply due to the fact that money begins circulating slower and there is less to go around. Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply, increasing government spending and diminishing taxation, all hoping cash flow will hasten. A depression is really only characterized as a recession that lasts longer than a year or two.

Right now for the things you may or may not be as privy to. As concisely mentioned in a previous article, the indicators to the permanence of a recession and the possibility of a upturn are leading, lagging, and coincident. Principal indicators are the economic indicators that actually send us spiraling into a recession or jacking back up into prosperity. Lagging indicators react slowly to economic changes, and are therefore worthless as far as prediction goes. They really are best at assessing the present status of a recession, for instance, jobless numbers that are still on an inclination even though the worst is over. Coincident indicators are also used to assess recent economic conditions but are understood to be synchronized or sectional and not always related to the complete economy as a whole.

Leading indicators (as found in the Index of Leading Indicators) are:

1. Average number of initial applications for unemployment insurance
2. Number of manufacturers’ new orders for consumer goods and materials
3. Speed of delivery of new merchandise to vendors from suppliers
4. Amount of new orders for capital goods unrelated to defense
5. Amount of new building permits for residential buildings
6. The S&P 500 stock index
7. Inflation-adjusted money supply
8. Spread between long and short interest rates (the yield curve)
9. Consumer sentiment
10. Average weekly hours worked by manufacturing workers

Lagging Indicators (as found in the Index of Lagging Indicators) are:
1. The average duration of unemployment (inverted)
2. The value of outstanding commercial and industrial loans
3. The change in the Consumer Price Index for services
4. The change in labor cost per unit of output
5. The ratio of manufacturing and trade inventories to sales
6. The ratio of consumer credit outstanding to personal income
7. The average prime rate charged by banks

Coincident indicators (as found in the Index of Coincident Economic Indicators) are:
1. Number of employees on nonagricultural payrolls.
2. Personal income less transfer payments.
3. Industrial production.
4. Manufacturing and trade sales.

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