Well, that was fast.

The Wall Street Journal on page one says economists are hedging their bets on a recession, saying the business outlook has improved markedly in just the past month. And New York Times columnist David Leonhardt similarly writes on C1 that what was “fanciful” a month ago—that the U.S. might avoid recession—is less so now, something Bloomberg suggests is signaled by new consumer data.

What happened?

The Federal Reserve put a floor under the cratering credit markets with the bailout of Bear Stearns and the opening of direct loans to Wall Street. Its slashing of interest rates is beginning to filter through the economy. The Journal, the Times, Bloomberg, and the Financial Times all point to the $110 billion in stimulus checks the government has begun passing out as a brake on any free-fall.

But the immediate impetus for the stories is a spate of not-miserable economic reports, including employment and consumer spending. Consumer spending dropped 0.2 percent in April (that’s not inflation-adjusted, in real terms it was worse), but the Journal and Bloomberg say it was up a better-than-expected 0.5 percent, not counting car sales.

Employment meanwhile hasn’t fallen off the charts, though it’s down significantly. While the NYT sees that indicator as half-empty, writing that the economy has fewer jobs than it did six months ago, “a perfect predictor of recessions” over the last half a century, the Journal sees it as something like half-full, noting that new jobless claims are “well below” the 400,000 level typically seen in recessions.

But the list of factors the economy must overcome is daunting: soaring energy and food costs (and import prices, up 15 percent from a year ago) that are kicking up inflation, tighter credit, a housing market that has another few trillion of home wealth to burn through, overextended consumers more pessimistic than at any time in decades, and a financial system that is still deeply troubled. The Journal puts a good bit of news down low, reporting that the Minneapolis Fed president told it the U.S. can’t avoid recession.

And, as the Journal notes, a recession is “a period of significant decline in economic activity… that lasts more than a few months.” With 0.6 percent annual growth in the last six months, that definition is already awfully close to being met. If the U.S. pulls out of this nosedive, it’ll be one for the history (and econ) books.

Recession. No recession. Recession

As if to prove economists are of two minds, here’s the same Lehman Brothers’ dismal scientist in different papers. The FT:

“Given all of the negative news… the strength in this report is a startling reminder of the resilience of the US consumer,” Drew Matus, senior economist at Lehman Brothers, said.

And the WSJ:

“I think the problems are just starting,” said Lehman Brothers economist Drew Matus, citing high gasoline prices and tightening lending standards, saying that prolonged stagnation can be worse than a recession.

Bloomberg and the WSJ report that Fed chief Ben Bernanke said financial markets are “far from normal,” which is Fedspeak for “still screwed,” and some officials are making noise about raising interest rates to battle inflation. The FT reports that the Fed is looking at disowning the Greenspan laissez-faire philosophy of asset bubbles.

Reuters says a Philadelphia Fed survey of economists finds that the odds of a recession have increased. Non-economists, as polled by the Los Angeles Times and Bloomberg, say we’re already in recession by a seventy-eight to seventeen margin.

UBS official indicted

The business papers report that the U.S. indicted a former UBS banker and a Lichtenstein executive, accusing them of helping a rich developer skip out on taxes—a “widening probe” sparked a couple of months ago when a bank employee in the tiny European bank haven leaked incriminating info to investigators.

The FT and the Journal both front the news, which the NYT puts inside its business section. The Journal’s lede is the juiciest, saying the two are charged with “opening secret bank accounts, destroying documents, using Swiss credit cards and filing false tax returns.”

The WSJ says the charges are further evidence that “elaborate tax-evasion schemes available only to the super-rich are teetering toward a collapse.” Here’s how serious the feds are: the UBS guy they charged fell into their nets when he came singing to them about the wrongdoing, the Journal says, but “prosecutors opted to indict him anyway.” Pass the popcorn, this ought to get interesting.

Refiners pinched by oil prices

The Times on its Business Day cover looks at how high oil prices are sticking oil refiners, too.

After last year’s stellar profits, American refiners are going through a traumatic period. In a time of record gasoline prices, some of them actually lost money in the first quarter, and for virtually all refiners, profits are down sharply.

Experts say the refiners are caught in a double bind. The price of their raw material, oil, is rising because of strong global demand. At the same time, consumption of gasoline in the United States is falling as a result of slower economic growth and consumer efforts to conserve.

Oil consumption dropped 3.3 percent in March from a year ago and the paper says refiners are cutting way back on production, stirring suspicions among consumer advocates.

The WSJ on A3 and the Times on C1 write that Congress voted to stop stockpiling oil for emergencies in a bid to relieve pressure on demand. It’s a move Bush has promised to veto, though Congress looks to have the votes to override it. The Senate passed it 97-1.

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