Before I answer that question, I’d like to hear the official announcement that we’re in a recession.

I’ve been saying we are since late 2007. Here’s a column in which I explain why this period meets the technical and official National Bureau of Economic Research (NBER) definition of a recession.

But there’s no official word yet. Once we all agree we’re in a recession, just when we’ll get out is a very good question.

First, I’d look for the stock market to rally — and sustain the rally. I’m particularly interested in companies like UPS and FedEx, since they have real insight into the pulse of business. When they see more traffic, you can be sure something good is afoot.

I’d also look at companies that specialize in basics. Purchases that have been long delayed should start to pick up when we’re coming out. For example, car sales are below the normal basic replacement rate. I’d expect a big turnaround there. But don’t look for any particular car company’s insight, since some may not survive this recession.

Since basic materials always accompany an economic rebound, the Fed’s survey of industrial production is the best economic indicator to follow. An upturn in activity is nearly a perfect signal that a recession (green bars) has ended.

Federal Reserve Industrial Production Index (G17)

Real wage growth per working person has also been a good indicator — of both when a recession is about to begin, and when one’s about to end.

Job growth is also an indicator, and it’s been accurate in seven of the last nine recessions (those between 1960 and 1982). The last two recessions, however, haven’t followed the model. Either something changed, or — as I believe — the last two recessions didn’t really end when the NBER said they did. For example, marking the end of the 2001 recession as sometime in 2003 would make a lot more sense.

A closer look at income (below) reveals the same inconsistency. Along with jobs, wages dropped throughout 2002 and into 2003. Marking the end of the recession at the final income dip in mid-2003 would again explain a lot of otherwise difficult-to-reconcile data. For example, in 2003, consumer confidence tumbled, and a host of other fairly normal economic indicators slumped. Also, retail sales didn’t begin to recover until later in the year.

So while I don’t really think any of the reliable indicators have become flawed, I have to acknowledge the possibility.

That said, I expect this recession to end in the middle of 2009, and maybe as soon as the spring. Some indicators, like unemployment, will continue to worsen into 2010 — probably getting close to 9% — but economic growth and particularly industrial output should recover in mid-2009.

And of course, the minute the stock market gets a whiff of good news, it will rebound. So the market could begin to rally in early 2009.

But again, first things first. We need to admit to ourselves that we’re actually in a recession. So hurry up, NBER, and announce it already.

In our weekly “Ask the Economist” feature, our resident Economist, Mike Donnelly, tackles your questions about the economy. If you’ve got a question — and no topic is too big or small — you’d like him to field, e-mail us at economist@pbp.com or leave your queries in the comments section.

Tags: Economic rebound, FedEx, National Bureau of Economic Research, Recession, Recovery, UPS