Despite slower consumer spending and issues such as credit quality deterioration, bank economists on Wednesday said they are not girding for a recession just yet.

Echoing recent optimistic assessments by some heads of the regional Federal Reserve Banks, several of these economists pointed to a healthy job market and the Federal Reserve Board's vigilance.

"This is a tightrope walk between a recession and a soft landing," said Sung Won Sohn, chief economist at Wells Fargo & Co. "Things are not as bad as some people think."

Mr. Sohn noted that a lot of people have been finding work thanks to a labor shortage, and that was not always the case in the 1980s and early 1990s.

"I don't think we have a situation where it is a catastrophe," he said.

Richard DeKaser, chief economist at National City Corp. of Cleveland, said during a presentation Wednesday in Chicago that the economy is flirting with a recession but that there probably will not be one.

Still, "we are going to see deterioration," he said. "As the economy slows, we are going to see profits and cash flow slow."

The corporate sector especially will be hit, since it has a bigger debt-service burden, Mr. DeKaser said. Similar trends are emerging on the consumer side.

In his address at the Metropolitan Club in Chicago, Mr. DeKaser said harsh weather curtailed consumer spending in November and December, the annualized rate of consumer spending dropped nearly 5% in the first quarter, and that the higher price of natural gas has left consumers juggling payments on their credit card bills, car loans, and home equity loans.

Diane Swonk, chief economist at Chicago's Bank One Corp., called the waning consumer confidence a "transitory event."

"This is not a repeat of the credit crunch we saw in the early '90s," she said. The possibility of a recession is "a bad bet," she said, because all indications point to a rebound.

She said these indications include consumer spending on automobiles and homes, lower energy prices, and President Bush's proposed tax cut, announced Tuesday. Mr. DeKaser said he believes the proposal has a good chance of passing.

Ms. Swonk said the Federal Reserve will also play a crucial role. It "is willing to hedge risks," she said. "They believe the economy is poised to rebound. This is a very activist Fed."

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