Contrary to the endlessly reported economic apocalypse, and despite the United States economy remaining in deep water, there are actually positive signs of tentative economic stabilization.

Following encouraging signals from the latest Federal Reserve's Beige Book report, the Conference Board's latest index of leading economic indicators pointed to a contraction that has been less intense over the past few months. Although the business research firm's index "remains on a general downtrend that began in July 2007, with widespread weaknesses among its components," its rate of decline "has moderated somewhat this year."

The Conference Board report "suggests that the economic recession that started in December 2007 will continue in the near term, but that the contraction in activity could become less severe in upcoming months," it added.

Yesterday, the Federal Reserve said it sees signs the recession is easing and that the economic outlook has "improved modestly" since last month.

"On a day when the government reported another chilling plunge in economic activity, the Federal Reserve said Wednesday that it saw tentative signs of stabilization but vowed to keep pumping out money at full speed for the foreseeable future," the New York Times reports. The central bank said it would "continue to keep the benchmark interest rate . . . at virtually zero for 'an extended period.' It also maintained its previously announced program to buy up mortgage-backed securities and Treasury bonds without changes."

"Fed policymakers offered a less dour assessment of the economy than the one provided at its previous meeting in mid-March," the Associated Press reports. "The economy has continued to contract, though the pace of contraction appears to be somewhat slower."

New actions were announced on Wednesday, although the Fed repeated its pledge to "employ all available tools to promote recovery."

"The fact that the Fed didn't announce any new approaches is somewhat good news," Joel Naroff, of Naroff Economic Advisors, told Forbes. "It means there haven't been any major surprises popping up that required additional policies. Indeed, the longer we go without the Fed having to become even more imaginative, the closer we come to the point where we can say we are starting to get out of the recession."

Consumer sentiment, too, seems to be advancing in the recession-stricken economy, as U.S. consumers turned considerably more confident in April, the Conference Board reported this week. The business research group's consumer confidence index, based on a representative sample of 5,000 U.S. households, leaped to 39.2, up from a revised 26.9 in March, a gain of nearly one point from that month's initial estimate.

April's findings mark the index's highest reading this year, driven primarily by a significant improvement in the short-term outlook, according to Lynn Franco, director of The Conference Board Consumer Research Center.

"Consumers' short-term outlook improved significantly in April," according to a statement. "Those anticipating business conditions will worsen over the next six months declined to 25.3 percent from 37.8 percent, while those expecting conditions to improve increased to 15.6 percent from 9.6 percent in March."

While anxieties remain high regarding consumers' intention amidst the global recession, more manufacturers expect positive revenue growth despite plummeting international sales and demand concerns, according to the first-quarter edition of the PricewaterhouseCoopers LLP Manufacturing Barometer.

The report, released on Monday, reports a slight uptick in economic optimism among U.S.-based industrial manufacturers with 16 percent of 62 industrial-manufacturing executives polled expressing optimism about the U.S. economy over the next 12 months, up 11 points from the previous quarter. More than half the U.S.-based respondents (55 percent) remain pessimistic about the U.S. economy — an improvement from the 70 percent who were pessimistic last quarter.

While consumer spending has shown stabilizing signs, it is still constrained by rising unemployment, falling home values and hard-to-get credit. Weak sales and credit difficulties have forced businesses to cut spending and lay off workers

"The wide-scale fears of declining international sales, as we reported in previous Manufacturing Barometers, were finally realized during the first quarter of 2009," Barry Misthal, partner and industrial manufacturing sector leader at PricewaterhouseCoopers, said. "Manufacturing executives are hoping to ride out 2009 with a focus on making their companies leaner and more efficient, while aligning inventories to match lower demand levels.

"Taking these kinds of cautionary measures should position manufacturers for a more auspicious start to 2010," Misthal continued.

Given the near-term difficulties, 42 percent plan to trim their workforces, up seven points from the fourth quarter of last year and 27 points from Q1 2008. However, the cuts won't be as deep, with cuts expected to affect 1.8 percent of the workforce, compared with 3.2 percent in Q4 2008.

"Low demand forces the reduction of inventories, which means that manufacturers will be operating on a conservative basis through the summer months," Misthal explained. "However, manufacturing projects, and activity should resume in the fall, when new orders are typically placed. We believe we'll see a rebound in hiring plans, along with inventory replenishment in the coming year — assuming that demand picks back up by year-end 2009."

Undoubtedly, domestic manufacturing and the national economy as a whole face myriad arduous challenges in the times ahead. But we should respond to the reality, not the rhetoric. And the reality is that while it could be months or even years before the economy is growing at a pace that will add jobs and improve standards of living, there are encouraging signs of improvement to be found and considered.

Earlier: Weekly Industry Crib Sheet: Promising Signs Amidst Tough Times

Resources

The Beige Book: Summary of Commentary on Current Economic Conditions
Federal Reserve District, April 15, 2009

The Conference Board Leading Economic Index for March 2009
The Conference Board, April 20, 2009

Federal Open Market Committee Statement
Board of Governors of the Federal Reserve System, April 29, 2009

Fed Cites Easing of Decline and Affirms Policy
by Edmund L. Andrews
The New York Times, April 29, 2009

Fed Sees Signs Recession May Be Easing
by Jeannine Aversa
The Associated Press, April 29, 2009

Economy Falls Into Spring
by Joshua Zumbrun
Forbes, April 29, 2009

The Conference Board Consumer Confidence Index Increases in April
The Conference Board, April 28, 2009

First Quarter Manufacturing Barometer
PricewaterhouseCoopers LLP, April 28, 2009