After the shock at how the US economy plunged so quickly in the last few months, might the next surprise be how quickly it recovers? Poring over the torrent of mixed indicators which caused alarm and confusion last week, most US economists seem to have concluded that all is not lost - or as analyst Mr Chris Varvares of Macroeconomic Advisers in St Louis put it, there is "gloom but no doom".
The economy hit an air pocket in November and December, said Mr Robert McTeer, head of the Federal Reserve Bank in Dallas, Texas, and the discomfort is only temporary.
Not all the news last week was bad. The financial markets are no longer in retreat. The Dow Jones Industrial Average was up for the week. While unemployment figures crept up 1 per cent, the number of jobs created rose by 268,000 in January. This statistic went so much against the gloom-and-doom trend that Wall Street stocks fell back a little on fears that it would discourage Mr Alan Greenspan from making another rate cut.
The Federal Reserve chairman reduced the inter-bank lending rate by a full percentage point in two moves in January in the face of almost zero growth, falling consumer confidence and the lowest business investment in a decade.
Mr Greenspan noted that companies had over-invested in new technology and this sector would slow down because of mounting inventories. Nevertheless technology spending remains strong and shows continued growth: the spate of bad news from companies in this sector concerned lower profits after highly-optimistic expectations.
However lacking in confidence about the future, there is also strong evidence that US consumers are still flashing their credit cards. Spending on construction and services was up for the last quarter of 2000. New home sales at 975,000 in December were the highest in 25 months. Car sales in January did not collapse, as predicted, rising to 17.2 million in January compared to 15.4 million in December.
This should be measured against vehicle sales in the early part of last year, which were "at a level of output that no one believed could be sustained", according to Mr Varvares.
The argument that there would be a collapse in consumer spending was "implausible", said Mr Gordon Richards, economist at the National Association of Manufacturers in Washington. He cited the still-buoyant jobs market and the reduction in interest rates, which would allow people to refinance their mortgages and ease the pressure on their credit cards.
Savings levels are at zero in the US and consumers are burdened with high levels of debt - a factor which prevented a speedy recovery when the economy slumped badly in 1990.
President George W Bush may succeed in bringing in a tax cut backdated to January 1st which, as he said at the weekend, would enable people "to retire their credit card debts".
Economists surveyed by CBS.Market.Watch.com put the chance of recession at 40 per cent, with growth slowing to 0.9 per cent in the first quarter. While noting that growth was sluggish and inventory-building remained excessive in all business sectors, Mr Bruce Steinberg, chief economist at Merrill Lynch said: "We certainly do not believe we are in a recession."
His sentiments were echoed by Mr Stephen Slifer, chief economist at Lehman brothers, who said: "There is ample justification for optimism about the second half of the year."
This is not to say that there will not be extreme discomfort in the days ahead. Business Week yesterday published a profit survey of 114 bellwether companies, which showed that fourth-quarter 2000 profits rose a mere 0.8 per cent. Excluding energy companies and utilities, profits for the group fell 9.2 per cent. Nor is the fourth quarter likely to be an aberration.
"It takes six months for interest rates to play through for us," said Mr James W Anderson, head of investor relations at Caterpillar Inc.
