Is There Room for Optimism?(Brief Article)

We knew things were bad before Sept. 11--and worse after. The latest U.S. figures for last month showed the sharpest drop in consumer confidence in a decade; in addition, shipments of capital goods sank to the lowest level in 25 years, a dismal decline--or make that "horrendous," as Morgan Stanley economist Stephen Roach put it. Now come the latest employment numbers, showing 200,000 layoffs last month--the largest one-month decline since February 1991.

Some experts are nonetheless cautiously optimistic. According to Bank One Chicago economist Diane Swonk, 19 percent of U.S. manufacturers report that inventories have grown "too tight"--setting the stage for new purchases. The Bush administration beefed up its stimulus package even more last week, and the Federal Reserve cut rates by half a point. As a result, some economists have dropped the "R" word (recession), in fact, and are talking "V's"--as in a sharp economic upswing by spring or summer.

The most hopeful economists are anticipating what they call "comfort points" ...