NOW THEY START ASKING "WHAT RECESSION?":

Vital Signs: A Fragile, But Growing Economy: ISM indexes for both manufacturing and nonmanufacturing, construction spending, car sales, and the employment report (James Cooper, 5/30/08, Business Week)

What recession? It's a question gaining more attention with every new month's worth of economic data. Through April, at least, reports plainly show a fragile economy but one that's still growing, albeit feebly.

Since the credit-market blowup began last August, consumers have been pulling back on their spending but not as sharply as had been feared, and the same is true for business outlays and hiring. Overall, first-quarter growth in real gross domestic product was revised upward to show a gain of 0.9%, following the fourth-quarter's 0.6% rise. Importantly, the advance reflected a bigger contribution from overall demand, especially net foreign trade, and less from inventories. That sounder mix puts the economy on a little firmer footing heading into the second quarter, just as households begin to collect their tax rebates.

Consumers will continue to provide the litmus test for the economy's resilience, and this week's economic data offers another key reading: the May employment report due on Friday. So far, job losses have been mild, so income growth has slowed, but not sharply. Economists expect nonfarm payrolls to have declined by 50,000 in May, but that projection and other recent losses have been far less than the typical early-recession experience. If the May expectation is on the mark, payrolls will have fallen by about 300,000 since their peak in December, compared to losses of more than twice that size during the first five months of the last two recessions.