Economic outlook.

• Author: Maley, Frank

The U.S. economy has softened, but there's no hard evidence it's in recession--defined by many economists as at least two straight quarters of decline in real gross domestic product. More than 50% of economists in a recent poll say it is or will be by the end of the year. Three-quarters of consumers say it already is. Mark Vitner, senior economist at Charlotte-based Wachovia, disagrees.

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BNC: What do the numbers tell you?

Vitner: The economic indicators do not quite point to recession. They're still consistent with sluggish economic growth. You can't look at the numbers and say absolutely that we're heading for recession or we're absolutely going to avoid one, but it looks like we will narrowly avoid a recession in 2008. But for most consumers, it will feel like a recession.

Why is their perception at odds with the numbers?

If you were to look back over time, consumers probably say the economy is in recession far more than it is, because they really don't make distinctions that economists do. They're not looking at the data. To economists, a recession means that the economy is actually contracting, not merely weak.

How are we doing, compared with the rest of the nation?

North Carolina is clearly doing better.

Why do you say that?

We're adding jobs at a 1.5% annual rate. The unemployment rate is roughly even with the nation's, but our labor force is growing about twice as fast. We're continuing to see an increasing number of large capital-investment projects.

You said recently that the pain caused by the current economy will be more severe than in 2001 and possibly 1991. Why?

Gross domestic product measures the production of goods and services in the economy. Consumption of goods and services is already contracting. But that doesn't make a recession. What's keeping the economy in positive territory is that exports are growing very rapidly. Essentially, exports of U.S. manufactured goods have risen more over the last 21/2 years than housing has fallen.

How does that compare with 2001?

In 2001, consumption of goods and services in the economy never declined. So the domestic economy is actually weaker today than it was in the 2001 recession, weaker than at any time since 1991. That's a big part of why consumers feel so bad. But year-to-year growth in GDP, which includes exports, is 2.5%, which is far stronger than the economy has ever been when we've gone into recession.

Is it a good idea to expect a recession anyway and...