It is rare to hear any discussion of the stock m🦂arket without mention of the current economic outlook. The economy is always in flux, with times of booms and times ♛of busts, and with many economic analysts and investors sharing different opinions on when a tide will turn and in what direction.

For example, while 2018 marked a recovery period from the recession of 2008, analysts are now wondering if the post-CO♒VID-19 recovery in 2022 is sustainable. Will the Federal Reserve Board’s move to raise interest rates to tame COVID-induced inflation mean aꦆnother crash in the future? 

When the economy is down, certain indicators may signal an economic recovery. As these signs show improvement, it may be time to make changes to your portfolio so that you're positioned to take financial advantage of it.

1. Employment

It is difficult to talk about an economy in recovery if people are not getting back to work. There are such things as jobless recoveries, where there is enough economic activity to get businesses ꧋moving agai𒅌n, but not enough to stimulate hiring.

In most other cases, however, investors are right to correlate an improving economy with hiring. Therefore, the reported 澳洲幸运5官方开奖结果体彩网:unemployment rate is often given 🤪a great deal of weight by observers.

Keep in mind, though, that unemployment data is not always reliable in the early stages of a recovery. The quirks of the statistical measurement method exclude those w💦ho have abandoned the work search. However, when recovery seems plausible, some of these people resume their search and count once again among 🐎the unemployed.

澳洲幸运5官方开奖结果体彩网:Non-farm payroll is another valuable employment measure. It gives a somewhat clearer sense of how many people companies are hiring. Along with the number of people added (or subtracted) from payrolls, investors can see where these workers are going and where wages are trending. They can make assumptions about the growth of disposable income.

Along with unemplo🤡yment and non-farm payrolls metrics, investors cꦦan also follow the lesser-known ASA Staffing Index. This index measures activity in the temporary staffing industry.

Often when employers seek to add workers, they add temporary workers first to avoid the commitments and expenses of adding full-time employees ahead of a confirmation that business has improved. As such, a climbing ASA Staffing Index can signal that a recovery is underway.

2. Consumer Spending

For better or worse, the U.S. economy is driven by 澳洲幸运5官方开奖结果体彩网:consumer spending. Consequently, it is difficult to imagine a recovery that does not include rebounding consumer spending. Longer term, consumers may realize that they should save more and spend less, but that sort of restructuring does not occur overnight. Consider consumers opening their wallets a sign of a recovery.

3. Consumer Sentiment

Perhaps it is a testament to the power of positive thinking, but sentiment indicators such as the 澳洲幸运5官方开奖结果体彩网:Consumer Confidence Index (CCI) and the 澳洲幸运5官方开奖结果体彩网:Michigan Consumer Sentiment Index do seem to correlate with reality more often than not. These surveys rate how people feel about the economy in the near term and their individual or family prospects.

Ultimately, sentiment is something of a self-fulfilling p♔rophecy. If there is a constant drumbeat of how bad things are, people often become more conservative in their spending habits. Less spending can then create an economic soft patch. When people are more optimistic, though, they are more likely to spend money, start or expand small businesses, and otherwise act in ways that are good for economic growth.

4. Business Indicators

How consumers feel about the economy is all well and good, but it has to be matched by optimism and expansion in the business community. The 澳洲幸运5官方开奖结果体彩网:Purchasing Managers' Index (PMI) surveys whether businesses are seeing new orders, higher production levels, timely deliveries from suppliers, and increasing inventories and employment. These are all areas where a recovery will show itself.

Inventories are harder to correlate as many businesses will look to run down inventories before committing to an expansion of production. This ch𒉰oppiness is often an issue in early economic recoveries; businesses do not want to miss the turn in the economy (and let their rivals capture share), but they do not want to overextend themselves either.

5. Bank Lending

While public companies are not entirely dependent upon banks to grow their businesses, most small non-public businesses are. Without banks 澳洲幸运5官方开奖结果体彩网:underwriting new loans, small businesses do not grow. Without that growth, it is d꧋ifficult to see higher employment and a stable recovery.

The Federal Reserve provides regular information on bank lending activity. Investors can also look to the PayNet Small Business Lending Index to see whether small businesses are seeking (and getting) the funds needed to expand their businesses.

6. Shipping Activity

Shippin♛g activity is a bit harder to read than other indicators, but the basic idea is straightforward. That is, since most people buy things that come from someplace else, overall economic activity correlates with the movement of goods across the continent.

Notable indexes here include the 澳洲幸运5官方开奖结果体彩网:Cass Freight Index and the American Trucking Association's 澳洲幸运5官方开奖结果体彩网:Truck Tonnage Index. The latter index can provide insight into economic growth and production, but it has its critics.

The Bottom Line

Economic recovery involves increasꦓing production, increasing consumption (or savings), increasing employment, and increa🅘sing activity in areas like construction and transportation.

None of the six indicators described above is foolproof, or that useful when viewed in isolation. Moreover, every ꦉeconomic cycle is a little different from prior cycles, so investors should be 🧸sure to apply their common sense when using metrics to inform their outlooks.

But broadly, by keeping a careful eye on whether businesses are preparing for growth, whether consumers feel comfortable about spending, and whether money and goods are moving through the economy, investors can develop a sense of whether the next recovery is real.