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Economic Forecasts

How to Measure the Economic Recovery

When four of these key benchmarks move into the green zone, you'll know that the economy is healthy again.

Track all these indicators at kiplinger.com/links/recovery.

Consumer sentiment

WHAT IT IS: A monthly gauge of how consumers feel about the economy and their personal finances.WHY IT MATTERS: Confident consumers buy more, stimulating the economy. Worried consumers postpone purchases, which acts as a drag on the economy.WHAT TO LOOK FOR: When the economy is chugging along at full steam, consumer-confidence readings of about 90 are typical.

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We've got the money blues Just 28% of households surveyed expect their finances to improve in the year ahead.

Standard & Poor's 500-stock index

WHAT IT IS: A measure of stock prices for 500 big U.S. companies and a proxy for the overall market.WHY IT MATTERS: Stocks tend to lead the economy. Plus, more than half of U.S. households own stocks, so people feel wealthier when prices rise.WHAT TO LOOK FOR: Steadily rising share prices, which portend an improving economy; also, a return to the 2007 high, which means the market's losses would be erased.

Sizzling sectors In the past year, three sectors have rocketed up the most: financials, industrials and consumer discretionary.

Housing prices

WHAT IT IS: The median sale price for existing single-family homes.WHY IT MATTERS: Housing prices color perceptions of our financial health and affect our willingness to spend. Prices also reflect conditions in home-building, appliances, furniture and other related industries.WHAT TO LOOK FOR: A credit bubble pushed prices in 2005 to 2006 to unsustainable heights. It's likely to take years to return to those levels.

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Strong sales down South The National Association of Realtors predicts that home sales will be strongest in the South and weakest in the Northeast.

Unemployment rate

WHAT IT IS: The percentage of working-age men and women who want jobs but are unable to find them.WHY IT MATTERS: People who don't have jobs don't have money to spend, restraining economic growth.WHAT TO LOOK FOR: When unemployment is 5% or so, it is considered negligible. But anything below 6.5% would show a solid recovery and would mean that most workers who had been laid off were back at work.

Better in Bismarck Michigan has the highest jobless rate, at 14.1%, followed by Nevada, at 13.4%. The lowest: North Dakota, at 4%.

Industrial capacity use

WHAT IT IS: A gauge of how much factory, mine and utility resources are being used.WHY IT MATTERS: A low number means idle equipment and unused space, spelling lost profits for firms and fewer jobs for workers.WHAT TO LOOK FOR: A figure of 77% or more is typical in a healthy economy. However, rates higher than 80% could mean an overheated economy and spark worries of inflation.

Small but mighty Manufacturing accounts for only 12% of gross domestic product, but production has a big impact on the other sectors.

Credit availability

WHAT IT IS: The difference between the percentage of small businesses that say credit is becoming harder to get and the percentage that say it's becoming easier to get.WHY IT MATTERS: If credit is scarce and expensive, businesses can't expand. Because small businesses account for about half of all jobs in the U.S., their ability to get credit is vital.WHAT TO LOOK FOR: A gap of 9 points or so signals more-normal conditions.

Tight conditions Federal Reserve chairman Ben Bernanke says the credit markets for small businesses are "much tighter than they've been at any time in recent memory."

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