Recession Naysayers Hold Out

"Fears of recession are running rampant, but we think there has been an overreaction to the recent data," writes Darda. As for recent data that swayed many toward the recession camp, Darda notes that the Institute for Supply Management's report last week of a contraction in the manufacturing space with a reading below 50 at 47.7 is consistent with positive growth of 1.8%.

He also adds that the same data point has been as bad or worse at least four times in the past 12 years without preceding a recession. During the past two recessions, the ISM averaged below 45 as well, he adds.

First Trust Advisors' chief economist Brian Wesbury believes the economy will skirt recession because retail sales and consumer spending held up in the fourth quarter more than the economic bears had expected.

In a note Monday, he points out that November retail sales were strong and that fourth-quarter consumer spending is expected to show a 3% jump, adjusted for inflation.

December's consumer behavior is thus far "still OK," he writes, adding that car and truck sales were up in December and that chain-store sales have not slumped dramatically.

Wesbury also reminds clients that while December's 18,000 new jobs and unemployment rate jump to 5% from 4.7% were disappointing, it could well be subject to revision. August's initial report of 4,000 jobs lost in the month opened the door to the Fed's 50-basis-point rate cut in early September, but the jobs number was subsequently revised to an addition of 93,000 jobs in the month.