Most recent economic reports still show a mixed bag. But right now, strong indications are that the worst of the downturn is behind us.

Here’s the latest on four key indicators:

1. Inflation is basically flat. That allows the Fed to keep interest rates low, and put less pressure on consumers to save — meaning they can spend more of those hard-earned dollars. One caveat: Low inflation is the goal — if prices drop much more, we’ll be looking at a deflationary spiral which could be nightmarish if left unchecked.
2. The Federal Reserve is optimistic. Fed Chairman Bernanke recently said that the technical indicators show the recession is likely over at this point. But even Bernanke admitted that recovery isn’t likely to pick up steam quickly. “It’s going to feel like a weak economy for some time,” he said at an address at the Brookings Institution.
3. Regional and industry-specific bright spots are growing. Speaking of the Fed, a recent report by the Philadelphia Fed shows growth in regional manufacturing. Similar signs of growth are being seen in other regions. And overall industrial production is up as companies that had slashed inventory start to beef up again.
4. Consumer spending is expected to rise. Despite significant job losses, household net worth is actually up this year — thanks largely to consumers cutting back on spending to attack household debt.
   Bottom line: Consumers have already started putting their own financial houses back in order. So while the free-wheeling spending may not return any time soon, there’s reason to believe that once they see economic stability returning, they’ll start shopping again to relieve some of that pent-up demand.