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What are the Signs of Recession Recovery?

By Jacob Queen
Updated May 17, 2024
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The first signs of recession recovery are usually related to stock market increases. After that, several important indexes will start to rise, including the consumer confidence index, and businesses will generally start having profitable quarterly results. Eventually, job growth will begin to rise as well, and that is usually a reliable indicator that the recession is probably over for real. There are also some non-scientific methods for spotting a recession recovery, including watching the shipping markets and the sales of things like wedding rings. At any point in the recovery process, it is possible for everything to short-circuit and the whole economy to fall back into a full-on recession.

The earlier indicators of recession recovery are generally the least reliable. The markets will often start rising prematurely and then fall back to their previous lows. This can happen repeatedly during the process of recession recovery. Most experts recommend paying more attention to the more reliable indicators that appear later.

When people in the real economy start spending more money, that is a very good indicator that a recession recovery is underway. The consumer confidence index measures the mood of average people, and it can be a good sign that the economic mood is changing. A higher rating generally means that people feel safer about their money and are more likely to spend it.

Early in a recession, many businesses are likely to be unprofitable, and when those businesses start turning things around, it is generally a sign that a genuine recession recovery may be occurring. Some businesses are often able to survive a recession without being touched for a variety of reasons, and those businesses won’t be as important to watch. When the companies that lost the most money start turning things around, it can mean that the fundamental factors that were holding the economy back have been corrected.

Jobs are generally the last thing to return to normal during a recession. Companies often downsize as a way to stay profitable during an economic crisis. Hiring new employees generally means a reversal of that process, and businesses are often afraid to take the risk until they are absolutely certain that a real recovery is happening. Sometimes the effects of a recession recovery are hard for the average person to recognize on a daily basis, but a recovery of the job market can have a strong effect on people at every economic level.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

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