Most recent economic indicators have shown signs of an improving economy. Although no official end-date for the recession has been announced yet, the economy clearly appears to be in recovery.

Upside

• The Blue Chip Economic Indicators consensus forecast for 2002 real GDP growth has risen from 1.0 percent in January to 2.6 percent in April.

• The U.S. Bureau of Economic Analysis revised its estimate of U.S. real GDP growth up by 0.3 percentage points for the fourth quarter of 2001 to 1.7 percent.

• The index of Leading Economic Indicators, a key gauge of future economic activity, remained relatively robust at 112.4 in February, unchanged from January. The index had risen for the prior four consecutive months and is 3.4 points above the level from a year ago.

• The Consumer Confidence Index rose 15.2 percentage points to 110.2 in March.

• The Institute for Supply Management (ISM) economic activity indices have been robust in recent months. The manufacturing index was at a two-year high of 55.6 in March. Although it fell slightly in March, the non-manufacturing index remained well above the critical reading of 50 at 57.3.

• The Industrial Production Index bottomed out in December and has since risen for two consecutive months.

• Sales of existing homes maintained a strong pace in February, putting up the second highest monthly total on record.

• Payroll employment rose by 58,000 in March, its first gain since August 2001, despite a slight increase in the unemployment rate.

• The Blue Chip consensus for corporate profits has grown rapidly in 2002. Initial profits were expected to remain flat after dropping sharply in 2001, while the current consensus predicts a healthy 6.5 percent bounce in profits.

• In the first quarter of 2002 the Standard & Poor's 500 was up 4.3 percent, the Dow Jones Industrial Average was up 5.0 percent, and the NASDAQ was up 3.1 percent. This is the first quarter all three major stock indices have increased since the third quarter of 2000.

• Profits on Wall Street are expected to rise 26.9 percent in 2002, according to the Securities Industry Association.

Downside

• Due to recent international crises, precautionary demand, and production cutbacks, oil prices have been rising rapidly since December, reaching their highest level since September 2001. It is likely that they will rise further since Iraq has decided to suspend oil exports.

• Weekly unemployment insurance claims for the nation have surged sharply for the week ending on March 30. This is due, in part, to the recent extension of eligibility period rather than to deteriorating economic conditions.