Recently, I was trying to find some consoling words for a friend experiencing a protracted work-related crisis.  He stopped me in my tracks by mournfully admitting “Just when I thought this was the light at the end of the tunnel, it turned out to be an approaching train..” Ah, the cruelty of the false dawn. 

Often, it’s only obvious with hindsight when the turning point of a crisis was.  Earlier this year in the UK, Business minister Baroness Vadera was criticised for tentatively claiming to have seen “a few green shoots” of economic recovery.  She should have known better – this phrase has an unfortunate history in the UK, points out The Independent, being also used prematurely by then Chancellor Norman Lamont in the recession of the 1990s.   Mind you, Baroness Vadera covered her bases somewhat, also referencing “straws in the wind” and “single swallows making a summer”.

Baroness Vadera based her views on improvements she had observed in the credit market.  But there are a wide variety of indicators which one could watch for signs of recovery.  A whole clutch relating to housing - house prices, mortgage enquiries, and mortgage arrears (bit of a lagging indicator, this one); manufacturing output and exports; the strength of your national currency; consumer confidence and retail sales. There’s no lack of choice, certainly in the UK where HM Treasury publish a range of weekly indicators .

A crude round-up indicates cautious optimism from a range of authorities, admittedly authorities who might consider they have a role in talking up the economy. 

UK: The Chancellor’s Budget speech (April 09) – “GDP growth for the year as a whole will be minus 3 ½ per cent .. (but) I expect to see growth resume towards the end of the year.” 

Europe: Ewald Nowotny, council member of the European Central Bank (May 09): “I do indeed see green shoots for the European economy,”

USA: Bernard Bernanke, chairman of the Federal Reserve (April 09) "Recently we have seen tentative signs that the sharp decline in economic activity may be slowing. A levelling out of economic activity is the first step toward recovery."

Global: World Bank President Robert Zoellick (May 09): “My sense is that, while we will still have declines, the rate of the declines will lessen. The question is when we will return to growth in the global system and that could be late 2009 or 2010. I don't think this will be 2011." 

Recovery will come, even if it’s hard to predict when. If we’re not too rigid about our definition of recovery. I don’t think we will ever regain the same position we were in before the current crisis – I think there has been a sea change in consumers’ priorities; stakeholders’ appetite for risk and society’s acceptance of what it considers disproportionate rewards for business (and other) leaders.  I’ve even read arguments that this recession marks the beginning of the end of capitalism.  That might be a bit extreme, but the evidence from other trends (for example, Web 2.0 and how it changes the nature of consumerism) is incontrovertible. Which raises the question how we equip ourselves for the post-recession state.

Richard Pennycook, FD of UK supermarket group Morrisons, seemed to have some useful tips in a recent CFO article about turnarounds, of which he has a lot of experience.  He stresses the importance of cash management, control, cost cutting, managing successive crises, management culture and a lot of other ‘c’s in his nifty checklist.

What do you think of Richard’s tips?  What indicators for economic recovery are you monitoring?  Do you think the recovery has started? – take our latest CIMAsphere poll which will run for a week from today.