NEW YORK (CNN/Money) - As expected, the second big economic shoe dropped this week and hit with a resounding thud: another big job loss in March and an even bigger one in February than was previously announced. Add that to news this week of a downturn in manufacturing and what do you get? Two important recession signals flashing the same message: Danger Will Robinson!

From Friday's lousy numbers on employment (forget the steady 5.8 percent unemployment rate right now, it's an economic red herring), to the surprising pullback in manufacturing on Tuesday reported by the nation's purchasing managers (and don't forget a crummy reading on the services sector sandwiched in between!), the news suggests that the economy stalled out as an anxious nation awaited the war.

Here's what matters in trying to figure out where the economy is heading, the four main indicators of recession:

1. Employment - the number of jobs created each month
2. Industrial output -- mainly manufacturing
3. Personal income -- think monthly paycheck
4. Business sales -- wholesale and retail

It's worth noting what's NOT on that list:

1. Two quarters of negative GDP (gross domestic product) growth
2. The unemployment rate

First, the NBER (National Bureau of Economic Research) states explicitly that recession is NOT defined by negative GDP changes. They use the four "coincident" indicators of the economy listed above. If you don't believe me, go the Web site.

Second, the NBER also goes out of its way to explain why it does NOT rely on the nation's unemployment rate to figure out if the economy is moving ahead or shifting into reverse. It says that the household survey (a survey of people at home conducted by government interviewers) is "noisier" than the establishment survey (a survey of businesses conducted by the labor department), and it says that unemployment is a "lagging" indicator," in other words, something that turns after the business cycle turns.

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I interviewed Jared Bernstein, labor economist at the Economic Policy Institute, this morning on a special edition of CNN Money Morning and he pointed out that the fact that the unemployment rate hasn't risen more recently is that many people have gotten discouraged and just stopped looking for work.

It's true that the way the household survey works, if you're out of work, and the government calls you, and you say, "Things look so bad I just didn't go job hunting this week," then you are no longer in the labor force -- because you stopped looking! And if you aren't in the labor force, you can no longer be counted as unemployed. That's why I said the relatively steady unemployment rate may be a red herring.

So, that's why the loss of 108,000 jobs in March may be telling us a lot more about the state of the labor market than the unemployment rate holding steady.

On to indicator number two, manufacturing, whose state was revealed in the latest survey from the Institute of Supply Management on Tuesday. Their index fell sharply, signaling contraction in that sector for the first time in five months.

Not good. The pick-up in manufacturing was one of the most encouraging signs that at long last business spending was starting to pick up again, giving the nation's modest recovery some much-needed reinforcement. The fact that factory orders fell sharply in February, a report released on Wednesday, certainly seems to confirm the disappointing loss of momentum in the industrial sector.

In the plus column, recession indicator number three: personal income, comprised mainly of wages and salaries but also things like interest payments, government transfers, rent, etc. Real disposable personal income (income less tax payments, and adjusted for inflation) was growing at a year-over-year rate of 2.2 percent in February.

Putting it in perspective, that's better than November 2001 (after the 9/11 attacks) when it fell to zero, but it's not robust either. Bottom line, with stocks flat, most people's spending will be determined by how much money they're making. In broad terms, real consumer spending may be held to a rate of growth similar to the growth of income, about two percent annually -- which is not bad, but certainly not strong.

Finally, business sales. We know that business shipments fell 1.5 percent in February, and we also know that chain store sales and auto sales have been tepid. So that part of the equation is not looking so hot.

So does it look like recession? If the war ends quickly, this could turn out to be a fleeting concern: tumbling oil prices would free up disposable income, and companies with very lean inventories would need to order and produce more quickly if spending picks up. Then hiring and output would spring back to life, and this patch of weakness would not be deemed the beginning of another recession.

But if the war ends and firms don't start hiring workers again, and consumers remain cautious, and factories don't get the orders they need to boost output (and hire more workers), then we may look on the NBER's Web site one day and find out that the signals flashing yellow for caution have gone to fullblown economic red alert.

Kathleen Hays anchors the FlipSide, airing weekdays at 11:00 am on CNNfn, and appears throughout the day reporting on the economy and how it affects financial markets. As part of CNN's Business News team, she is also a regular contributor to Lou Dobbs Moneyline.