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.

"The housing number was totally distorted by the warm weather," he said. "To me, that's noise."

At any rate, his slight retreat is notable considering his past position, and he isn't the only bear looking for a coat change.

"Although we continue to believe that economic growth in 2007 will be subpar, recent incoming information has induced us to modify the forecast a bit," Paul Kasriel, director of economic research at Northern Trust in Chicago, wrote in a Jan. 9 memo.

Kasriel upped his GDP forecast to 2.3% for 2007, with a 2.5% first-quarter growth figure. At the beginning of December his forecast for first-quarter growth stood at 1.8%.

Even so, he believes the housing sector, which slowed considerably last year, could still weaken the broader economy."I'm not convinced that some of this late fourth-quarter event is not related to weather," he says.

Then there are the economists in the forecast early and forecast often camp.

"We are less pessimistic than a month ago, but more pessimistic than were we were two months ago, says Joe LaVorgna, chief U.S. economist at Deutsche Bank in New York. He concedes that overall, his view is more bearish than most on Wall Street.

LaVorgna forecasts GDP growth at 1.8% in the first quarter followed by 1.9% in the second quarter. His full-year prediction is about 2%. Weakness in the housing and auto segments of the economy will be primarily responsible for the softness, he says.

For now at least, one notable bear who appears to be sticking to his thesis is David Rosenberg, an economist at Merrill Lynch in New York.

"We may be too optimistic at 1.7% GDP growth in 2007," he stated in a Nov. 28 report. "And yet we are at the bottom of the consensus barrel."

By Jan. 4, he was still singing a similar tune. "We think that the spreading influence of the housing recession will be more evident in the year ahead," he wrote in a research report. Rosenberg wasn't available for comment.

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