Irrational Depression.(Brief Article)

There are times when it's probably a good thing that the U.S. economy isn't run by logic. Because if you applied logic to the news these days, the logical conclusion would be that the economy has fallen off a cliff and is about to splatter itself all over the canyon floor and take us with it.

Friday's newspapers, for instance, carried stories about more than 30,000 technology workers getting fired--forget the word "layoffs"; we're talking firings. Yech. And an astounding $45 billion write-off by JDS Uniphase, a onetime high flier now fallen to earth. JDSU, whose stock is down around 95 percent from its peak, has decided that companies it bought are worth $45 billion less than it paid for them.

Earlier in the week there was yet another huge round of firings at Lucent Technologies, once touted as a premier supplier to Internet and telecommunications companies, now a corporate cripple fighting for its life. And day after day you see corporate chieftains who six months ago talked about a recovery coming in six months telling us they have "no visibility." That's corporatespeak for "We have no clue when business will pick up."

The only bright spot in the economy, it seems, has been consumer spending. And logic suggests that can't continue, because workers should be worried about losing their jobs. And because the huge stock- market drop in the past 16 months has led to such a decline in Americans' net worth that they should be throwing away their credit cards any second and heading for the financial storm cellars.

So why haven't I joined the sackcloth-and-ashes crowd? For the same reason you didn't see me in the "endless boom" crowd back when the myth of eternal growth took hold in the late 1990s. Repeat after me: nothing goes in a straight line forever. About the time that things seem all- wonderful or all-terrible, they're probably about to change.

I'm not foolish--or arrogant--enough to predict exactly when the upswing will be visible and good times will be rolling across America again. If I knew that, I wouldn't be working for a living, I'd be a rich retiree. But my gut--supported by a few numbers--is telling me that the worst is probably past us.

For starters, we're not even in an official recession--two straight calendar quarters in which the gross domestic output (adjusted for inflation) declines. The economy still seems to be growing, albeit ...