NEW YORK (CNN/Money) - Now that the war with Iraq is nearly over, another conflict is roiling -- not between the United States and Syria, North Korea or Iran, but between those U.S. economists who think the economy will now bounce back and those who don't.

Some said the Iraq war didn't make for very good television, and Economic Smackdown 2003 probably would lose a ratings war, too. But the contest can be tracked all the same with every economic indicator.

Most economists think the winner in this dispute will be clear by May or June, when the numbers either will have gotten ugly again or will point the way to a brighter future. Then, the Federal Reserve will be able either to pat itself on the back or scramble to make another interest-rate cut.

"Both camps will cling to their arguments for a couple more months," said David Resler, chief economist at Nomura Securities. "But the answer's not going to come from monthly data -- those are still too much in the past to be much help."

For that reason, most economists, and U.S. markets, easily dismissed the Fed's report Tuesday that industrial production was worse than expected in March -- a month, after all, when the war began and weather improved, shutting off output from utilities.

Even the dramatic drop in the Empire State survey of New York manufacturers, which has become something of a Wall Street darling for its ability to predict the direction of other regional and national surveys, was ignored, since its data were gathered during the war.

More telling, Resler and other economists believe, could be some critical weekly numbers. They're often volatile, but could reveal trends that will give advance warning about the economy's direction.

The weekly consumer confidence poll, compiled by ABC News and Money magazine, has become almost as popular as the Empire State survey. (Money, of course, is a partner of this site.)

The U.S. economy is showing signs of improvement. CNNfn's Jan Hopkins takes a closer look at positive signs in the economy. Play video (QuickTime, Real or Windows Media)

Its upturn last week predicted a similar gain in the closely watched University of Michigan sentiment survey later in the week and has led some economists to hope an improvement in consumer spending, which fuels more than two-thirds of the total economy, will follow.

"The jump in confidence is almost certainly due to improved perceptions about the war with Iraq as well as reduced anxieties over the outcome," Tony Crescenzi, bond market strategist at Miller Tabak & Co., wrote in a recent research note about the ABC/Money poll and other "high frequency indicators."

Crescenzi thinks these indicators could be pointing to stronger gross domestic product (GDP) growth in the second quarter, following what was likely pitiful growth of below 2.0 percent in the first quarter, according to the latest Blue Chip survey of economists.

That momentum could carry into GDP growth of between 4 and 5 percent in the third quarter, Crescenzi believes, a pace that hasn't been sustained since late 1999.

"Whether this strong growth is possible will be more visible by the end of May, but it appears to be well within the realm of possibilities," Crescenzi wrote.

Consumers' feelings don't always translate into spending behavior, however, and another key high frequency indicator, weekly chain store sales as reported by the Bank of Tokyo-Mitsubishi (BTM), has given mixed signals.

Sales slumped in the weeks ended March 29 and April 5, even as the war seemed to be going well for the United States and consumers were telling survey-takers how good they felt.

The future of retail sales still is murky, but economists aren't ready to predict a mad dash to the malls.

"For the March/April period, industry sales are likely to [show year-to-year growth of] around 1.5 percent, which is a continuation of the sluggish trend that has been in place since about August 2002," BTM economist Michael Niemira said.

Many economists worry consumers won't really feel good about the economy again until the labor market improves -- and it's stayed stubbornly bad for months.

"To me, the key indicator is employment. We need to see at least three months of pretty hefty increases in employment before we'll be able to say we're out of woods," said Sung Won Sohn, chief economist at Wells Fargo & Co.

Private, non-farm payrolls have lost more than 2.6 million jobs since a recession began in March 2001, and new weekly claims for unemployment benefits have stayed above 400,000, a benchmark level indicating weakness, for eight straight weeks.

Claims fell in the latest week, which could mean either the worst of the job-cutting is over -- or employers are simply taking a breather.

Monthly Labor Department data on the growth in non-farm payrolls come with reasonable quickness. By May 2, corporate hiring practices in the immediate post-war period will be clear -- and the picture might not be pretty.

"I don't think businesses will hire more people in anticipation of higher demand," Sohn said, citing conversations he's had with business leaders in recent weeks. "They want to see demand first. They feel they have the flexibility to increase production without hiring people."

Other indicators include automobile sales, weekly mortgage activity as reported by the Mortgage Bankers Association of America, and the difference, or "spread," between the interest rates on corporate bonds and Treasury notes -- if investors think the economy's going to pick up, they think companies will have more cash, meaning they'll have better credit and will have to pay lower rates.

Even if these and other indicators are consistently bad, however, there's no guarantee the Fed will be in any rush to cut short-term interest rates, which it sometimes does to encourage money to flow through the economy.

With the Fed's key rate at a 40-year low, and with Congress discussing an enormous tax-cut bill, the Fed could need a lot of convincing that it needs to do much more.

"Fed action is not a fait accompli -- weakness might have to extend through the second half to lead to a Fed cut," Merrill Lynch chief U.S. economist David Rosenberg said.