Most optimists agree that the first quarter of 2001 will be a weak one, but they believe the economy will begin returning to health by the spring. Even now, amid the turmoil, spending continues to grow modestly, and sales of new homes actually rose 13.4 percent in December, more than reversing a drop during the previous month, the Commerce Department said in a separate release yesterday. And even if corporate inventories are growing, they remain slimmer than in the past, and companies will need less time to empty their warehouses. Recession skeptics also said that because of the importance of technology, most companies would also decide they must keep investing in new equipment. In the second quarter, however, Deutsche Bank expects gross domestic product to rise about 1 percent.
Most economists define a recession as two consecutive quarters of economic decline.
The National Bureau of Economic Research, a private firm in Cambridge, Mass., officially decides when one begins. Yesterday's release offered further evidence of the tough times that the manufacturing sector, particularly the auto industry, is experiencing. Had the two categories remained flat, the economy would have grown twice as fast as it did. Separately, the Purchasing Management Association of Chicago said yesterday that manufacturing activity in the Chicago area had fallen this month to its lowest level in 18 years. Another industry association will release national manufacturing data today.