Among the many conflicting economic reports released by government agencies and trade associations so far this year, one stands out – the Commerce Department's preliminary report on real gross domestic product (GDP). For the first three months of 2001, it showed the overall U.S. economy growing at a seasonally adjusted, annualized rate of 1.3%.

The U.S. economy has expanded at an annual rate of 4.2% or more during each of the past four years – including last year's 5.0% growth, the best since 1984. So, 1.3% growth may not look like much, but viewed in context, it was actually extremely encouraging.

During the final quarter of last year, GDP increased at an annual rate of just 1.0%. Then there were the discouraging reports of plunging production and orders volume in the manufacturing sector and tepid consumer confidence. As a result, many analysts were looking for the U.S. economy to actually show a slight decline in overall GDP during the first quarter of 2001.

Indeed, it's slightly more likely than not that the U.S. economy will be able to skirt a full-blown recession this year. But the landing won't be soft with numerous parts of the manufacturing and information technology industry sectors experiencing their own mini-recessions right now. Call it a bumpy landing.

Furthermore, we're not out of the woods yet. That first-quarter GDP report is only preliminary, based on tentative estimates for numerous important components. Furthermore, harbingers of any growth at all during the second quarter of this year are not very positive.

All factors considered, however, we're increasingly optimistic that the current economy is in a growth recession. Meaning, a period of severe slowing, but still positive trends in GDP rather than a full-fledged recession.

Still, it will feel like a recession to many because we're coming off a period of unparalleled economic prosperity – the longest stretch of uninterrupted growth of 10 years and counting in U.S. economic history. And this year's slowdown (from 5.0% growth in GDP during 2000 to a forecast growth of just 1.6% this year) will be the steepest between any 2 years since the oil crisis of 1974. Relying on the skills of economic policy makers, and a little bit of luck, the current economic expansion should be able to avoid the scrap heap.

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