Backpedaling Time for Bears

A leopard can't change his spots, or so the adage runs, but there's nothing to stop a bear from trading in his claws.

Some observers who have long been preaching caution are now doing just that. Take, for example, Nouriel Roubini, one of the most bearish market watchers. "My view is currently that the probability of an outright recession is somewhat reduced," he said last week.

Roubini's new view stands in contrast to comments he made during an interview on TheStreet.com TV in October when he forecast a year-long recession in 2007. At the time, he thought the pullback would be deeper and more protracted than 2001 slowdown.

However, "the risk of a 'growth recession' is still very high," the professor of economics at New York University said.

The most commonly used definition of a recession is two or more consecutive quarters of declining gross domestic product -- in other words, a shrinking economy. By contrast, a "growth recession" describes an expanding economy, albeit one growing at less than full potential.

Still, even though he might be taking a step back from the glummest aspects of his prediction, he isn't necessarily ready to suggest that the economy is positioned for a strong advance.

When presented with the surprisingly solid unemployment claims report, out last Thursday, as well as robust housing starts and benign consumer inflation data the same day, he essentially shrugged.

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