How to Know When the Economy Is Turning Up

This is where our troubles began and this is where they should end. Any perking up in the housing market would be a signal that we're on the mend. Some pundits like CNBC's James Cramer and the highly regarded researchers at Moody's Economy.com are calling for a bottom the second half of this year. But there isn't a lot more to be optimistic about right now. "There's still a tremendous excess of unsold homes, both new and existing," says Jeoffrey Hall, chief U.S. economist for Thomson Financial. He's watching the National Association of Home Builders House Market Index, which measures recent sales, expected sales, and prospective buyer traffic. The index is at an all-time low: 8 (on a scale of 100, where 50-60 is normal). Further, all three components of the index hit an all-time low in December. He'll start to feel better about a recovery if the index gets back to 20 this year — even if it's only prospective buyer traffic that pushes the index higher. "The faster it rises," says Hall, "the faster I'd say we're emerging from recession."

See pictures of Americans in their homes.