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Diverse Global Economic Views at World Economic Forum - 2002-02-02

Some data shows the U.S. economy, the engine of global growth, is emerging from recession, but others aren't as convincing. Views by experts, whether expressed at the World Economic Forum or outside, vary just as widely.

Opinions about the global economy have been almost as diverse as the people attending the World Economic Forum. As one analyst quipped: If you are looking for answers, your own crystal ball could be just as relevant.

Some experts, perhaps a few, among the thousands of participants in the meeting, probably has the correct assessment. The odds would favor that. But who?

Gail Fosler, an economist with the New York-based Conference Board, a private business research group, takes a positive view of where the world's largest economy, the U.S. economy, is right now. She says it is on its way back. "My view is that the U.S. recession is over, that November will be viewed as being the trough," she says.

The latest data suggest the American consumer is getting more confident. Also, the U.S. central bank inspired cautious optimism this past week when it decided not to cut short-term interest rates again.

However, Stephen Roach, chief economist at the Morgan Stanley investment firm, says he sees nothing yet to indicate the U.S. economy is out of trouble, in fact, quite to the contrary. "The recession is not over," he says. "We'll probably have a "double dip," which is another down leg by the spring. And it reflects the fact that the fundamental state of the U.S. economy right now is 'crummy.'"

It is difficult to separate the U.S. slowdown from economic trends in the rest of the world. What about Europe? Jacob Frenkel, an economist with the Merrill Lynch investment operations in Europe, believes Europe, like the United States, is coming back. "Europe is on its way to recovery, albeit because Europe is less flexible, the recovery will be slower," he says.

Many corporate leaders at the World Economic Forum say they do not see an economic turnaround yet. Of course not, says Abby Joseph Cohen, the influential stock market analyst for Goldman Sachs. She says business people, for the most part, are backward-looking. "Very often business people are not leading indicators. They are co-incident or lagging indicators," she says. "And clearly the last two years have been very difficult for the U.S. economy, and the global economy, and much of what we're hearing today reflects that. Much of what we're seeing in corporate reports today reflects that as well. Companies are reporting what happened in 2001. They're not really telling us what they think will happen in 2002."

The job of tracking business or the global economy may not be nearly as confounding as that of the professional star-gazer, who has to work through the distortions or deceptions of realities light-years away. But it might as well be.

The truth is out there. Maybe. An astrophysicist seems comfortable in that zone of probability. The head of a household, or an investor trying to build up a safe retirement account, generally is not.