Only a few months ago, economists talked of a "Goldilocks economy" - neither too hot nor too cold. They saw economic nirvana.
But since then, the United States has been troubled by a series of disappointments. Corporate profits haven't reached predictions. The Federal Reserve last week cut interest rates only one-quarter of a percentage point, not twice that, as many had hoped.
Now the nation is being warned of another possible disappointment: a recession.
But even as a global financial crisis deepens and recession laps at American shores, central bankers and finance ministers from around the world, meeting in Washington this week, offered only vague remedies.
Indeed, most economists still expect the US economy to grow about 2.2 percent after inflation next year. They cite many statistics to back that up.
Yet gloomy views are spreading - at least according to some economic predictions.
Many economists nowadays use mathematical models of the economy to make forecasts. Because economists' record in predicting recessions is not good, they sometimes talk in terms of the probability of one occurring in the next year or two.
In Washington, the Economic Strategy Institute warns that if conditions around the world worsen, the US could suffer a dip in output of 0.7 percent next year and another 2.7 percent in 2000. Unemployment would approach the levels in the severe 1981-82 recession. In 1982, the jobless rate was 9.7 percent.
These bad numbers are not a prediction, cautions Clyde Prestowitz, president of the Washington think tank. They are a simulation, based on bearish assumptions cranked into an economic model developed by WEFA Inc. a consulting firm in Eddystone, Pa.
"The odds of a recession are nearly 50 percent within the next two years," says David Wyss, chief economist of Standard & Poor's DRI, a Lexington, Mass., consulting firm. In July, DRI saw a 20 percent likelihood for a recession. "The Fed's [interest] rate cut [last week] will not rescue the world - but it will help."
Federal Reserve Chairman Alan Greenspan declared yesterday the American economy is in "reasonable shape" but said there has been a marked shift in investor psychology and that turmoil overseas would clearly dampen growth. Mr. Greenspan disputed newspaper headlines that he said give the impression the economy is on the verge of collapse. He told the National Association for Business Economics: "We've got an economy that as of now is really quite an impressive sight."
Greenspan estimated that the stock- market decline since midsummer had destroyed $1.5 trillion in consumer and business wealth. He said that would mean slower spending in the future. "It's got to show up somewhere," he said. "We're bound to see a major impact in personal-consumption expenditures and housing."
Meanwhile, Bruce Steinberg, chief economist of Merrill Lynch, puts the mathematical probability of a recession in 1999 at 30 percent. And he expects the economy to grow by 1.5 percent - less than most economists predict.
THERE'S a 45 percent likelihood of a slump, reckons Brian Wesbury, chief economist of Griffin, Kubik, Stephens & Thompson Inc., a Chicago brokerage house. He blames the Fed for keeping rates too high and the International Monetary Fund for "unsound economic policy" in Asia, Eastern Europe, and Latin America.
Wall Street economist Robert Parks puts the likelihood of a recession at 75 percent.
Another nervous voice, Dimitri Papadimitriou, an economist at the Jerome Levy Economics Institute, calls for more interest-rate cuts and even a budget deficit "to avert a deep global recession."
These somber views stem from several factors:
* Financial turmoil in Asia and Russia, which may spread to Latin America.
* The weakening Japanese economy, the world's second-largest. Its banks are in bad shape.
* An inadequate response by world policymakers. "The world leadership vacuum is becoming worse," argues economist Wyss.
* The drop in stock prices. Merrill Lynch's Mr. Steinberg notes that the US has "the most equity-linked [stock-market- linked] economy that has ever existed." The decline in stock prices hits the wealth of households and could dampen spending, although there was not much evidence of that after the 1987 stock-market crash.
Nonetheless, Wyss figures consumers will begin to save more - at least $50 billion - because of their shrunken stock wealth, tripling the tiny 0.4 percent savings rate the nation saw in the second quarter.
Since household debts hit a record 99 percent of the after-tax income of Americans in the second quarter, Wyss welcomes a projected rise in savings. He notes that bankruptcies hit a record last year and auto-loan defaults are increasing.
* The slowdown shown in economic data. Consumer-confidence figures fell in September, and unemployment edged higher to 4.6 percent in September from 4.5 percent. Manufacturing has weakened, as have home sales.
But there was also positive news, such as personal income, which was up in August.
* A credit squeeze. Banks, concerned about the global crisis, have tightened loan standards.
Economists also expect the Fed to do something about the risk of a recession. Many expect another rate cut when policymakers meet Nov. 17 - or even earlier.
So maybe the majority will still be right - no recession, only a slower rate of growth ahead.