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By Jason Stipp and Robert Johnson, CFA | 08-22-2012 01:00 PM

Economy Not Over the Hill

Leading indicators suggest continued, though sluggish, growth for the U.S. economy in the months ahead, says Morningstar's Bob Johnson.

Jason Stipp: I'm Jason Stipp for Morningstar.

Two types of indicators give us a read on the current and potential upcoming health of the economy. What are they saying now?

Here to offer some insights is Morningstar's director of economic analysis Bob Johnson.

Bob, thanks for joining me.

Bob Johnson: Great to be here.

Stipp: Two types of indicators, coincident indicators and leading indicators. They hope to give us a sense of where we are right now, what's going to happen in the future. Let's start with coincident. What are those indicators and what are they saying about the current health of the U.S. economy?

Johnson: Employment is one of them, income is another, retail sales--what's going out of the stores, and industrial production--what we are producing in our factories. And those are the ones that have historically been considered the key measures of an economy and how it's doing right now. It's not predictive, but it shows where we're at right now.

Stipp: So what are those indicators saying?

Johnson: Those indicators seem to indicate that we are not in a recession at all right now. Every one of those indicators is in an upward trend. The only one that had any fits, if you will, was maybe retail sales. We had a very bad month in May and June and then came back in July. But industrial production continues to move up, and it's near its highest levels of the recovery, as is employment and income. So, we haven't come over the hump, if you will, yet. We're still in an upward trajectory on all of the indicators.

Stipp: Some prominent market-watchers, though, have claimed that we might already be in a recession. If these indicators are very clearly saying that we're not, what are they looking at and how are they reaching those conclusions?

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