When it comes to forecasting when the economy will change direction, the record of professional forecasters is pretty spotty. During all those years when we were growing at a record clip, the periodic warnings of slowdowns that never took place were quietly forgotten. But now that the economy is heading south, all eyes are on those who purport to know when things will turn around. If you take comfort in those predictions, you should know this: there is no harder call to make in the forecasting business than a turning point.

One thing that is emerging with sudden clarity in the data on the American economy is that we are in a recession. That news might seem a bit anticlimactic, what with the steady stream of downbeat stories on sales, profits, and layoffs served up by the business media in the last few months. Gaining a perspective from such stories is all but impossible, however, given the tendency of large, visible downturns to obscure our eyes from seeing the more numerous, smaller, upticks in activity that might offset them.

But the recently revised data on overall economic growth show that the nays have the upper hand in the U.S. economy, at least in the third quarter of 2001. The Bureau of Economic Analysis now says that Gross Domestic Product (GDP) fell at a 1.1 percent annual rate in the July-September period, or a bit worse than its preliminary estimate of a 0.4 percent decline.

Even though the data and the stories in the popular press agree that the economy is contracting, when you get down to the details things start to diverge. Reading between the lines of popular news stories, one gets the impression that consumers have stopped spending money, while the Federal government is on a spending tear.

Those movements may show up in future data, but for now the GDP data are saying something quite different. It is the sharp decline in business spending, and the cratering of exports abroad, that is beating down the overall economy, not consumers. And for all the talk in Washington, Federal spending has yet to get out of the gate.

Almost every category of business investment has been nosediving since the beginning of the year. The only sector keeping afloat has been spending on residential development, helped along by low interest rates and funds being yanked out of the stock market. Three straight quarters of double digit declines tell the story as to why so many equipment manufacturers, from computers, to telecommunications, to industrial machinery, are drowning in red ink.

Meanwhile, the export situation has gone from bad to ugly. The newly revised data show that export sales abroad contracted at a 17.7 percent rate in the third quarter. That's the worst single quarter performance for this sector in more than twenty-five years. It comes on the heels of a 11.9 percent decline in the previous quarter. The strong dollar and depressed economies of our major trading partners are dealing some very tough blows to sectors of our economy that make their living selling abroad.

The situation with consumer spending, commonly depicted as bleak, has really yet to deliver the bad news so commonly predicted. While no one would characterize the 1.1 percent rate of increase in spending in the third quarter as healthy, neither is it the cataclysmic decline some have made it out to be. In time, we may be making the same sort of statement about the recession itself.