The week before last, there was talk of cautious optimism about an early end to the recession.

Last week, the talk was how the economy was in an even worse condition than the authorities had predicted.

This week ...who knows?

Of this much we can be sure: the recession will end at some point. The question is when?

The precise timing of the beginning of the recovery is of more than academic interest. Every day, businesses must make decisions based on the overall direction of the economy: is now the time to expand or to retrench, to hire or to fire, to buy or to sell, to lend or to borrow?

The answers will vary from place to place and from business to business, but here are some ideas of what to look for – and what not to look for – when the tide really does begin to turn.

1   Dramatic improvements in the markets are not a sign of recovery: irrational mood swings tell us only of the markets' fallibilities. Anyway, markets tend to lead rather than lag, so any sustained uplift is indicatng actual economic activity a year or two ahead. Ultimately, recovery will begin with slow, steady growth after a long period of relative inertia.

2   Increases in property prices are not necessarily a sign of recovery: it may be that sellers are being forced to hold out for a high price because fear of negative equity means they cannot afford to sell for less. That would mean the worst is yet to come in the property market. The number of sales – or, rather, of unforced sales – may be a better indicator of recovery when it comes. 

3   Stimulus packages are not a sign of recovery but a panic response. The best sign that recovery is underway will be the British and American governments quietly dropping the spending commitments they have made in the name of stimulus, so that they may begin to address their budget deficits seriously.

4   The recession will be over when we stop worrying about deflation and start worrying about inflation.