Will a Recession Sink Into Depression?

Which letter of the alphabet best signifies the future direction of the economy: V (a sharp drop followed by an immediate and powerful upturn), U (a more gradual drop, followed by slow recovery, or W (a double-dip recession)? Listening to some economic bears out there, maybe L is the right letter—you know, the economy drops and stays down. Indeed, a few experts do think recession could potentially morph into depression because of the credit crunch. Standard & Poor's, in fact, just put out an economic report titled "No Depression" that counteracts some of that sort of hysteria. And the highly respected UCLA Anderson Forecast reaffirmed its prediction of no recession, much less depression. Make it sing, Reuters:

The U.S. economy will shrink in the second quarter, but avoid a recession this year as housing's drag will ease in the second half, helping normal growth return next year, according to a UCLA Anderson Forecast.... "The data don't yet add up to a recession and there is nothing here to challenge the basic story of sluggishness that we have had for two years," the forecasting unit's report said, adding: "Our no-recession forecast remains nervously intact."