Is the Worst Over for the Economy? Looking for Signs in the Numbers

The recession this month will pass a historic mark, exceeding the 16- month 1973-75 slump to become the longest since the Great Depression.

And while President Obama sees "glimmers of hope," economists caution that a recovery starting late this year or early in 2010 is likely to be slow and modest. Their concerns were bolstered today with news that the index of U.S. leading indicators, which points to the direction of the economy over the next three to six months, fell a sharper-than-expected 0.3 percent, following a 0.2 percent drop in February. Among the negative factors in the index: a plunge in building permits, a decline in factory hours, rising jobless claims and a drop in orders for capital goods.

A slightly more hopeful snapshot came from the National Association for Business Economics' latest quarterly survey, also out Monday. It shows that while companies and trade associates grew more pessimistic about the overall U.S. economic outlook this year, companies are seeing a slowing in the rate of decline in business activity that might signal a bottoming out of the recession.

Some other recent indicators:

Employment. The economy shed 663,000 jobs in March, raising the national unemployment rate to 8.5 percent—the highest in 25 years. And that doesn't include those cut back to part-time work and the many who are too discouraged to seek a job. Looking at the statistics, "there's no sign that the recession is slowing down," says Barry Bosworth, a senior fellow in economic studies at the Brookings Institution. "There's nothing in that data set that would suggest to you that the worst is over."

Unemployment is a lagging indicator, and many economists predict that the national unemployment rate could approach or even exceed 10 percent this year—a level already exceeded in some hard-hit areas of the country.

Retail sales. Since consumer spending drives about 70 percent of the economy, analysts were disappointed by news this week that retail sales fell 1.1 percent in March. Taken together with slight January and February gains, though, there is improvement compared with the sharp drops of late 2008. And consumer confidence indexes have flattened somewhat. After falling to an all-time low in February, the Conference Board's consumer confidence index rose slightly in March. And while still "deeply negative," Gallup's Consumer Mood Index, based on respondents' perceptions of the current economy and where it's headed, is higher than it has been in a year, with 32 percent of Americans say the economy is getting better and 61 percent saying worse.

"Confidence appears to have reached a bottom, although I wouldn't say there are any signs of a significant rebound yet," says Scott Hoyt, senior director of consumer economics for Moody's Economy.com.

Stock market. The stock market rallied last week with news of profits at Wells Fargo & Co., the first major bank to report first-quarter results. The Dow Jones industrial average climbed back to mid-February's levels, at least briefly.

But the market is volatile and, economists say, can't be taken as a dependable predictor of a turnaround.

• Read Behind Obama's Tough Balancing Act on the Economy
• Read 10 Winners in the Recession.