The calculation here is that the National Bureau of Economic Research, the nation's widely-recognized arbiter concerning when recessions and expansions begin/end, will probably announce an end to the recession soon.

The NBER is careful to point out that its committee emphasizes economy-wide measures of economic activity when evaluating the economic cycle, and it argues that domestic production and employment are the primary measures of economic activity.

Retail sales gained a seasonally-adjusted 2.7% in August, according to the U.S. Department of Commerce. This follows a 0.2% decline in July. The August results beat analyst expectations soundly, lending support to talk of a recovery. The Cash for Clunkers program is cited as contributing to August sales.

Without autos, sales increased 1.1%, still ahead of the anticipated 0.4% gain. Take gas out of the measure, as well, and retail sales grew 0.6%.

Inventories fell in July, for the twelfth month in a row, with the 1% decline a tad higher than the 0.9% anticipated by many economists.

Analysis provided by Theflyonthewall.com:

Corporate profits as a percentage of U.S. GDP are at the highest level they have ever been, exceeding 13%. This might lead a stock-market bear to conclude that bad days are ahead since profit margins cannot go much higher from here.

However, high profit margins also mean that there is plenty of room to increase wages and help the tapped-out consumer. The U.S. Federal Reserve may be close to decreasing interest rates. Also, Labor markets are tightening, with the unemployment rate at just 4.6%. This means a stronger negotiating position for employees, which usually leads to higher wages. In addition with the stock market finally taking off, stock options will be worth something, which will further help the consumer.

History tells us that the free-market economy has been a battle between labor and capital. Capital has had a twenty-year great run with profit margins going through the roof. Mostly likely it is time for labor to get its due. However, do not assume that reality is bad for the stock market. The post-World War II bull market which lasted to 1968 was driven by a strong labor movement. A stock market can do very well with a well-paid labor force.