While the economy has shown some signs of life recently, the official arbiter of U.S. business cycles isn't ready to call an end to the recession it says began in March 2001.

In recent weeks, a number of reports have given investors hope that the worst may be over for the economy and that a strong recovery could be in the cards for the second half of the year. Just this week, industrial output showed an unexpected gain, and on Thursday, the leading economic indicators, a gauge of economic activity six months from now, showed a marked improvement.

"It is possible that these two consecutive increases in the April and May LEI reflect the beginning of an upward trend, thereby ending the flat trend that began in early 2002," the Conference Board said.

Meanwhile, the Philadelphia Fed manufacturing index rose to 4.0 in June following a negative reading of 4.8 in May. Consensus expectations called for the index to rise to 4.1.

Yet the National Bureau of Economic Research isn't so sure the economy has turned the corner. In a memo late Wednesday, the committee said it needs "additional time" to interpret "the movements of the economy over the past two years." The NBER declared in November 2001 that the economy had entered a recession in March of that year and it hasn't yet said when, or even whether, that downturn has ended.

Topography

To be sure, the committee typically waits "many months" after an apparent peak or trough to make its declaration "because of data revisions and the possibility that the contraction could resume." The NBER said it waited until December 1992 to announce that a trough had occurred in March 1991.

One issue that continues to plague researchers, however, is the weak employment picture. Although the U.S. economy is experiencing growth in income and output, employment continues to decline, it noted. Indeed, weekly unemployment claims Thursday showed little improvement in the jobless picture. Although the four-week moving average of new unemployment benefits claims fell by 3,000, they remain solidly above the 400,000 level.

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