Recession Naysayers Hold Out

"We remain confident that neither a recession, nor any significant consumer slowdown, is in the cards," writes Wesbury. "The Fed is not tight, tax rates are still low, productivity is still strong, wages, incomes, and profit margins are still robust, and after revisions, the U.S. economy has proven its resilience time and time again."

Wells Capital Management's chief investment strategist James Paulsen agrees that the consumer is once again underestimated, despite the continued collapse in home prices.

"In this decade, there has been virtually no correlation" between housing and spending, writes Paulsen. He believes that "the outcome of the housing crisis will be determined by jobs," adding that while job creation is slowing, "it does not yet seem to be collapsing." He posits that December's economic activity may have been depressed due to weather. The Labor Department reported that the number of people not at work due to extreme weather in December was 60,000 above average.

As for the rash of negativity on Wall Street, "there've been a lot of doubters throughout this recovery," says Paulsen. "For the past six years, the recovery's supposed to have died."

Paulson adds that even last week's negative jobs and ISM manufacturing reports were not the only data in the game. The pessimism eclipsed what he called a "pretty good set of information" that offset the negative news. Namely, December's report of construction activity jumped for the second month in a row, on the basis of a 2.5% increase in commercial construction. The jump belies the bearish notion that commercial real estate would follow residential into decline, says Paulsen.

Likewise, the service sector is still expanding, and at a better-than expected pace in December, according to the Institute for Supply Management's report on Thursday.

Lehman Brothers' chief economist Ethan Harris finds himself frequently fielding the question from clients, "So why aren't you forecasting a recession?" His list of 10 reasons published Friday includes the economy's overarching strength over the past two decades, low inflation, high odds of a housing bailout, a conservative and shrewd corporate sector, the weak dollar aiding exports, conservative stock market valuations and the lack, thus far, of "a final unpredictable blow."

Darda says he is not under pressure from clients or anyone else to don the recession mantle, though there are probably a few who wish he'd shave.