What are some early indicators that the economy is starting to turn around?

It may be too soon to look at the economy turning around, but everyone wants to know what to look at. What data points will show the economy has hit bottom and starting to rebound?

1) Delinquency rates on home loans falls. The delinquency rates are reported by several sources and should be one of the first indicators that the economy has bottomed. When the delinquency rate actually falls, the economy may shortly hit bottom. But if the delinquency rate is rising, more pain will surly follow.

2) Electric generation has to increase by a nice percentage. One of the key indicators in a service economy is electric generation. If people are using lot's of new computers or making things, it will require electricity. So on a weather adjusted basis, electric generation needs to increase at a nice pace.

3) Private Employment shows a good positive growth. While the unemployment number grabs the headlines, one key growth indicator is a good increase in the overall number of jobs. During the current recession the actual number of jobs should fall. When we see the number of PRIVATE jobs (excluding the public sector) go up, then a recession may have hit bottom.

4) A new industry takes off. By it's very definition you cannot predict what the new growth industry will be, but every downturn has a NEW industry leader. While it can be an old industry, it has to have reinvented itself. Just a bigger or newer adjustment is not enough. It must be a radical change from the past. I have no idea what this will be, but it will be the best investment opportunity anyone can make.

5) Inflation returns and interest rates on Treasury bills increase. Without some inflation, the money supply may actually be falling. Thus, given the large government deficits, without a good amount of inflation, the economy is still very very sick.

6) The VIX falls. Stock market volatility is a sign the market has no clue what is going to happen. Until the market settles down, there can be no bottom in the economy. The longer the stock market is going up and down by 5oo points a day, the longer the recession will be. I would like to see the VIX back to historical norms before we can even talk about a real economic recovery.

While there may be other indicators, this is a good start. International economy is different and the following are some indicators:

1) Internationally, the Baltic Freight Index is a key indicator. Until this rate increases from it's current record lows, international trade is low and a severe drag on the world economy. Clearly the amount of new ships will impact the rate, but until the rate rises to a break even cost level, the world economy will be in recession.

2) The price of oil. Until the price of oil goes above $75, we are in a world recession.

3) The price of copper and other metals. Without an increase in metal prices, the world economy is in a recession.

Given the lower economic level of most of the world, the more traditional measures of economic activity will show the world's economic progress.

With these indicators as a start, everyone can look for signs of the economic turnaround. But I am not optimistic the signs will appear in the 1st half of 09.