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By Jason Stipp | 04-28-2010 12:57 PM

Three Indicators to Watch Today

Morningstar's Bob Johnson explains which signals are more meaningful at this part of the economic cycle. Plus, is it too early to call a top?

Jason Stipp: I'm Jason Stipp for Morningstar. Throughout the depths of the downturn Morningstar's Bob Johnson was keeping close tabs on a lot of economic indicators. But now that we're well into a recovery what are those indicators saying today, and what does he turn his attention to? He's here to tell me a little bit about that.

Thanks for joining me, Bob.

Bob Johnson: Great to be here.

Stipp: First question for you, you had a lot of favorite indicators throughout the downturn, things that you were watching very closely. Can you just give us a sense of the levels of improvement that you've seen on some of those?

Johnson: Sure. Absolutely. I think there were three keys that really got us excited about the market a year ago spring. And certainly the purchasing managers survey, the ISM survey of purchasing managers, it was a great leading indicator.

That number got as low as 0.3 and change. And now we've kind of come all the way back to 0.6, and the typical peak is only 0.7.

Stipp: So a lot of ground has been made up there.

Johnson: A lot of ground has been made up in that one.

Initial unemployment claims, at the peak again, about five-tenths of 1% of the population was claiming unemployment every week. That's half a percent every week. And now that number has gone down to 0.35, so we've had a pretty dramatic improvement. And kind of a typical number might be 0.25 or 0.3. So we're more than halfway back. That's another one that I've looked at that has come way back.

Consumer spending is the third one that really keyed us off that the market was turning. That one has certainly bottomed. In December of 2008, that was at its lowest level, and we've been up pretty much every month since then, since way back in December of 2008. So that's been another great number for us.

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