Any banker worth his or her salt knows that the worst performing loans are always written just as the economy is running out of gas. Yet, with the winding down of another economic expansion occurring before our eyes, the painful truth is the books at even the most solid and conservative banks are peppered with recently written loans whose quality is heading south. Those loans were extended to less credit-worthy customers by bankers who were certainly aware of their dependence on continued booming growth for repayment. Were they too stubborn to learn from past mistakes? 

That was the question recently addressed by Alan Greenspan, Chairman of the Federal Reserve, during his recent testimony on Capital Hill. But, if the truth be told, the deterioration of credit that regularly occurs in the mature phase of economic expansions is but one of what would appear to be many perfectly predictable facets of economic cycles that inflict pain and hardship on many of us. Others that come to mind are corrections in the stock market, as well as the production corrections necessitated by excessive accumulation of inventories. 

But knowing that the shoe is going to drop is not the same as knowing when. The old joke about the famous economic forecaster who predicted five out of the last three recessions has more than a little truth to it. Pinpointing turning points, when trends reverse themselves, is largely an exercise in humility. As any economic expansion gets long in the tooth, it can be just as risky to cash in your chips as it is to stay in the game. 

What is more, the character of every economic expansion is different. Another adage about the economy states that economic expansions don't die of old age -- they are killed off. In line with this metaphor, we might say that the murder suspects are not always the same. 

For those of you with memories of the 1970's, particularly in the motor vehicle industry, the surge in gasoline prices that began in the summer of 1999 might have put you on alert. After all, a price shock of similar magnitude made car sales nosedive and helped drive the economy into painful recessions in 1974 and 1980. 

But a funny thing happened to the automobile industry in 2000. It had its best year ever, and helped propel the overall economy to a third successive year of growth above 4 percent. What is more, growth in vehicle sales was led by a continued voracious appetite of consumers for the same gas-guzzling trucks whose demise was predicted by many industry pundits as the retail price of gasoline approached $2 per gallon. 

Those days of super-heated growth are in our rear view mirror today, but even now, in the midst of a slowdown some fear could be a recession, there are sectors of the economy that aren't following the same script. The slowdown in manufacturing that has proved so painful to many Indiana communities is hardly a surprise, but the strength of the housing sector certainly is. Moreover, consumer spending, buoyed by assets and wealth accumulated over nine years of uninterrupted growth, continues to be strong in the face of what would appear to be lower job security. 

The one certain forecast that we can make is that we'll continue to make mistakes in our predictions. Let's hope they're not always the same ones.