Three Cheers for 'Reganomics'

I was a guest for the full hour on CNBC's The Call this morning, a show hosted by Trish Regan. When introducing one of the segments, Regan actually hedged on whether the economy is in recession. That's right, she actually had the temerity to suggest that maybe, just maybe, the economy still has a smidgen of growth rattling around in it. That sort of mildly contrarian economic take is heresy on Wall Street these days, where recession is thought to be a done deal.

Well, good for her. Such optimism is not only a welcome change but one rooted in the economic data. Consider the following:

1) Although the economy has begun to shed jobs—80,000 in March, 76,000 in February—the losses so far have been much less than the 300,000 to 400,000 typically seen in a recession.

2) Weekly jobless claims are up as well, but the 375,000 level is below typical recession levels of 500,000 to 600,000, as Jim Glassman of JPMorgan Chase notes.

3) The Conference Board's Coincident Economic Indicators (industrial production, real business sales, payroll employment, and real personal income less transfer payments) rose 0.1 percent in March, a rate consistent, says economist Ed Yardeni, with real gross domestic product growth of 2 percent.

4) Macroeconomic Advisers, whose economic model is much respected on Wall Street, still has this quarter as slightly positive.

My take: Look, the economy has slowed sharply and may well be contracting a bit. But it hardly seems to be falling off a cliff. Even better, there are signs—like rising treasury yields—hinting at an easing of the credit crunch. And there is still plenty of monetary easing moving through the economic pipeline. Heck, the pervasive pessimism on Wall Street is itself a positive contrarian sign going forward.