Two weeks ago, Richard Berner, an economist at

Morgan Stanley Dean Witter

, proclaimed: "It's official -- recession has arrived." He almost seemed excited about the prospect, as he continued to speculate on the likely U-shaped recovery that he believes the U.S. will eventually experience.

This week, Berner not only didn't seem giddy about the idea, he went so far as to say that we were never even in a recession. "After a mild economic downturn, " he wrote in a report published Thursday, "we expect that the economy will begin to recover in the fourth quarter and accelerate smartly into 2002."

A mild economic downturn? Just two weeks ago we were dead smack in the middle of a recession. ...

Berner goes on to discuss the consumer price situation, saying that the economy is going through a stage of


, without danger of eventual


. "The case for reflation succeeding isn't airtight, because key forces are still holding the economy back," he conceded. "Indeed, we see those forces promoting a mild recession in the two middle quarters of this year."

So there was a mild downturn, or a mild recession, or we may even be in the midst of a recession, but clarification would be appreciated.

Of Course...

Chief Investment Strategist Greg Smith of

Prudential Securities

seemed a bit more certain about the extent of the current downturn, writing in a research report on Monday that "the economy seems to have avoided a recession."

Smith then added, "I'm not sure if this was good or bad." Smith isn't the first to express this sentiment. Other economists have given credence to the benefits of a recession, which can wipe the slate clean for the beginning of a new rally.

But Smith also expressed disappointment in the

Fed's recent actions. "Ultimately, the issue for the Fed is to make cash so uncomfortable that people are willing to spend and invest," he wrote. "In this measure, despite the five moves, they have yet to succeed."

Smith concluded, "In summary, I think that a lot of the stocks that are working in this market are not the

large-cap growth stocks. And in general, they are not even the large-cap stocks. If you can move down to these smaller areas, I think you can make some money."

And Then...

Smith's weekly note led right into a report from

Thomson Financial's

Joe Kalinowski this week,

Second Quarter and Beyond!

, in which the U.S. equity strategist discussed the second quarter's profit warning season and its implications for the economy as a whole.

"Total negative preannouncement

market capitalization measured 17.4% last quarter, as compared to 13.6% this quarter," he wrote in the report. "This indicates that more small- to mid-sized firms, with less impact on the major indices, are announcing earnings shortfalls."

Sure that's uplifting, but it gets better. "We have started to see more positive news creeping into the market," Kalinowski wrote. He also mentioned the relatively large number of retailers giving positive forward guidance. "Considering the weight put on consumer spending steering the economy out of recession, the fact that we are getting upside guidance from this industry is a good sign," he wrote.

If consumers are steering us out of a recession, then we must be in a recession. So we're back to square one, wherein Rich Berner declared, "It's here. The recession that we thought would arrive earlier this year has finally arrived," in his note from a couple of weeks ago. Either way, recession or not, things may be looking up earningswise.