Economic index shows end of recession in three months - Spokane, North Idaho News & Weather KHQ.com

Economic index shows end of recession in three months

WASHINGTON. - A popular economic index is forecasting an end to the recession in September with mild recovery beginning in October, that's just three months away.


COMMENT>>Do you think the economy is showing signs of recovery? Why or why not. Leave your comments at the bottom of the story.


The prediction is coming from the Economic Outlook Index, which is a product of USA Today and IHS Global Insight.

The two companies have eleven variables that are put together as part of a fancy formula.

San Diego State retired finance professor Tony Cherin calls the formula legit. Of it's eleven variables, seven were positive in May, including stock prices.

"To me it has not been what we call a sucker's rally, shooting up and shooting down. I feel there's some stability," says Professor Cherin.

Cherin isn't ready to plan a recession goodbye party just yet. One reason is California's impact on the overall economy.

Says Cherin, "We're looking at 30 million people in this state and we're looking at a state that is bankrupt."

Another reason is crude oil prices, of the variables that was also a negative contributor in May.

"In my opinion if they go up too much that can have a definitely deleterious effect on the economy," says Cherin.

Beyond formulas, Cherin says people need to feel good about spending again.

"I gotta be able to refinance the house and have equity in the house," says one man.

Another said, "People that I know that got laid off - getting a job would be a signal to me that the economy is turning around."

"To me, it's what the media reports. If the media is telling me, cause I'm ignorant, don't know what's going on in the finance market, and is consumer spending up, but if the media tells me that's what's happening," said another man.

Cherin's best advice is to take economist predictions with a grain of salt.

"Rupert Murdoch, you've heard of him. He says, 'You know why they invented economists? To make weathermen look good,'" says Professor Cherin.

Professor Cherin says he's leaning more towards a 2010 economic recovery.

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