Is the economy holding up nicely or spiraling into a recession?

An article in The New York Times by Vikas Bajaj entitled "Economy Holding Up, Reports Find" simultaneously offers up evidence that the real economy is holding up better than expected while noting some serious economists are raising their odds that the economy is spiraling into recession.

On the plus side:

Maybe the American economy is not going to keel over just yet, after all.

Government reports released Thursday showed surprising resilience in the broader economy, even as the financial system and the housing market continue to weaken. Retail sales rose 1.2 percent in November, and even housing-related areas like furniture and building materials were up.

Wholesale prices surged, indicating strong demand and raising cautionary flags about inflation, and a weekly report found that new unemployment claims fell by 7,000, suggesting a healthy job market.

On the downside:

... Kenneth D. Lewis, the chief executive of Bank of America, told investors on Wednesday that the odds of a recession were "getting closer and closer to 50-50." On Thursday, CNBC reported that Alan Greenspan, the former Federal Reserve chairman, had raised his prediction for a recession to 50 percent, from 30 percent.

To be honest, I'm not exactly sure how any mere mortal (or even an honest economist) could accurately discern the risk factors that differ between a 1 in 3 and a 1 in 2 chance of recession. The important thing is that the odds are not substantially above 50% even after all that has happened and all that people fear will happen.

Needless to say, I personally do not believe that a recession is the likely scenario over the next twelve months.

-- Jack Krupansky