So, is the economy turning around? The skeptics-and there are always skeptics-say no, insisting the recent growth and positive economic signals are the result of inventory restocking and the stimulus bill. Once these factors are exhausted, we'll suffer a second dip in the decline, they argue.

Never mind that a majority of the stimulus funds haven't yet been spent on stimulating the economy, but this is a topic for another discussion.

Oh, and an index of housing sales contracts fell 16 percent from October to November, after nine consecutive monthly increases. Of course, October's numbers may have been skewed because many people rushed to go to contract fearing a valuable tax credit would expire, before, alas, the perk was extended. And, of course, housing sales are historically weak in the winter. But, don't tell this to the worry warts.

However, there are many more offsetting positive signals-GDP growth, manufacturing, rising commodities prices, and of course the surging stock markets, the best early indicator we have, to name just a handful.

Now, we have a number of recent upbeat reports coming from the credit markets suggesting the worst is behind us and that Corporate America's balance sheets are strengthening. No artificial props here.

The most recent case in point: Standard & Poor's Ratings Services said Monday that the U.S. speculative-grade-a.k.a. junk bonds--default rate decreased to an estimated 10.9 percent in December. This is down from 11.28 percent in November. Folks, this is the first monthly decline since October 2007, when the default rate hit a 25-year low of 0.99 percent, according to the debt rating firm.

This is big stuff. Despite all of the gloomy forecasts, the peak default rate for this frightening economic cycle came in below the record of 12.54 percent, set in July 1991. "Credit conditions in the U.S. remain challenging, but signs of improvement are beginning to emerge, such as improved lending conditions and a resurgence in new issuance," stated Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group, in a press release.

S&P now expects the junk bond default rate to continue declining to a mean forecast of 6.9 percent by September 2010. Its worst-case calls for a decline to just 9.9 percent if economic conditions are worse than expected.

This is not all. Standard & Poor's distress ratio also continues to decline, to 14.6 percent as of Dec. 15, 2009. The distress ratio is now hovering at a level not seen since June 2008, S&P reports. The bond distress ratio is defined as the number of speculative-grade issues with option-adjusted spreads above 1,000 basis points divided by the total number of speculative-grade issues.

A big reason for this decline: Narrowing spreads. At year-end the speculative-grade composite spread was 611 basis points, still pretty high by historical standards. But keep in mind that this was way down from a peak of 1,754 basis points on December 18, 2008, according to Vazza.

Meanwhile, Standard & Poor's investment-grade composite spreads are down to 191 basis points. This compares to a high of 578 points on December 17, 2008. By rating, the 'AA', 'A', and 'BBB' spreads have tightened to 128, 163 and 239 basis points, respectively.

Tighter spreads are a direct reflection of investor confidence.

Other trends bode well for the future as well. For example, the number of global issuers poised for downgrades declined in December to 824 issuers from 869 issuers in November, according to S&P.

Upgrades have outpaced downgrades 36 to 33 for U.S. nonfinancial industries since the end of October. In addition, the number of downgrades in the past four months combined is fewer than half the total the prior four months.

What's more, the proportion of entities with a negative outlook or ratings on CreditWatch with negative implications has declined for nine consecutive months. "We expect credit quality to slowly stabilize in 2010," S&P noted in that report.

Still need convincing? Okay, I have more. As of Nov. 15, there were 226 weakest links, down from the record high of 300 in April and 232 recorded one year ago. The current count is 25 fewer than the number counted in October 2009, the biggest single-month drop since January 2004, according to S&P. The 226 weakest links have combined rated debt worth $220.5 billion. Weakest links are issuers rated 'B-' and lower with a negative outlook or ratings on CreditWatch negative.

Small wonder corporate debt underwriting continues at a record pace. Eventually, companies will spend the proceeds of these offerings on new plants, equipment and employees.