The U.S. economy is in a recession, but it may be "hitting bottom," according to Robert W. Baird & Co. Inc. chief investment strategist Bruce Bittles.

"Yes, I believe we're in recession," Bittles told SBT this morning.

Bittles said he believes the stock market is a leading indicator of the economy.

"I do think the market has bottomed, near-term," he said. "The bottom is in place. I think the market hit a bottom last week … I think the economy is going to struggle in a slow-growth mode."

In his "Morning Call" report today, Bittles noted Federal Reserve Board Chairman Ben Bernanke's latest interest rate cut last week.

"Last week produced more evidence that the U.S. economy is in recession. Industrial production fell in February, led by a large 3.7-percent drop in utility output. In separate reports the Empire State General Business Conditions Activity Index plunged to a record low while the Philadelphia Business Index remained in negative territory for the fourth month in a row. Finally, the Leading Economic Indicators fell for the fifth straight month in February and building permits dropped to a 16-year low. Despite the weak economic numbers, the economy is expected to improve in the third and fourth quarters as aggressive moves by the Federal Reserve begin to have an impact. Bernanke, by dropping interest rates less than expected last week, regained a large measure of credibility as the dollar soared and commodity prices plunged. A return of confidence that the Fed is in control is a required first step before the economy and the financial markets can be expected to improve."

In another sign that the economy may be bottoming out, February sales of existing home rising modestly for the first time in seven months, the National Association of Realtors (NAR) reported today.

Existing-home sales - including single-family, townhomes, condominiums and co-ops – rose 2.9 percent to a seasonally adjusted annual rate of 5.03 million units in February from a pace of 4.89 million in January.

However, sales remain 23.8 percent below the 6.60 million-unit level in February 2007.

The national median existing-home price (2) for all housing types was $195,900 in February, down 8.2 percent from a year earlier when the median was $213,500.

Lawrence Yun, NAR chief economist, said, "We're not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing. Buyers taking advantage of higher loan limits for both FHA and conventional mortgages will unleash some pent-up demand. As inventories are drawn down, prices in many markets should go positive later this year."

The NAR's report helped to spark a stock market rally this morning. The largest local gainers this morning were Bucyrus International Inc. (up $3.81 to $101.83), Joy Global Inc. (up $2.54 to $64.58) and Harley-Davidson Inc. (up $2.02 to $40.25). The largest local decliners this morning were Wisconsin Energy Corp. (down 74 cents to $42.78) and Wauwatosa Holdings Inc. (down 6 cents to $12.43).

The BizTimes Stock Index was created by Small Business Times and is monitored by North Shore Bank. The index, which measures the stock values of publicly held companies based in southeastern Wisconsin, is updated daily and can be viewed at www.biztimes.com.