Almost unanimously, Philadelphia-area economists dismissed the notion that Tuesday's stock sell-off forebodes a national, much less regional, recession.

"It reminds me of the old joke," said Joel L. Naroff, chief economist at Commerce Bank. "Pessimistic economists have forecasted 32 of the last two recessions. If you keep saying recession, eventually you may be right."

A few experts did point out worrisome underlying trends, including the growing share of bad debt in U.S. subprime home mortgages and persistent risk of global investors' dumping their U.S. bonds and stocks.

But a half-dozen people interviewed by The Inquirer used terms like "overreaction" and "garden-variety correction" to describe Tuesday's 3.3 percent plunge in the Dow Jones industrial average.

"If this is it, then there's no economic consequence," said Mark Zandi, chief economist at Moody's "It will cost investors a few bucks, but it won't cost the economy in jobs."

Joe Davis, an economist and principal at the Vanguard Group Inc., said the relatively steady growth in global equity markets in recent years led to an unfounded sense of security, then an exaggerated wake-up call.

"What we're seeing is the realization that risk certainly still exists and always will," Davis said. "This realization is needed, if not exactly welcomed, to reinforce that risk still exists."

Some experts put the 416-point decline, followed by a 52-point increase yesterday, in the context of a long-running debate over the nature of economic cycles and the inevitability of recessions.

While the factors underlying the sell-off were numerous and complicated, the trigger may have been comments by retired Federal Reserve Chairman Alan Greenspan.

Speaking by telephone to a conference in Hong Kong, Greenspan suggested that the U.S. economic cycle was due for a recession by year's end. According to the Associated Press, Greenspan said:

"When you get this far away from a recession, invariably forces build up for the next recession, and indeed we are beginning to see that sign. For example in the U.S., profit margins . . . have begun to stabilize, which is an early sign we are in the later stages of a cycle."

Greenspan said it would be "very precarious" to forecast far into the future. He also said: "While, yes, it is possible we can get a recession in the latter months of 2007, most forecasters are not making that judgment and indeed are projecting forward into 2008 . . . with some slowdown."

All the economists noted the seeming contrast between Greenspan's comments and the relatively upbeat tone taken by his successor, Ben S. Bernanke, who Naroff said had "a Goldilocks approach to the world."

Davis, the Vanguard economist, said he interpreted Greenspan's comments merely as a reminder, not a warning, of the risks of recession.

Gary Wolfer, chief economist of Univest National Bank & Trust, of Souderton, Pa., was categorical: no recession, but perhaps periods of slower growth.

"We're not going to have a recession, but we are going to have what I would call a growth recession," Wolfer said.

Stephen Mullin, an economist at Econsult Corp., said the whole notion that recession is inevitable causes jitters whether or not they are warranted.

"Yesterday was a freak lemming story, as opposed to people saying, 'Oh my goodness, we're missing something fundamental here about the economy,' " Mullin said.

Jeremy Siegel, finance professor at the Wharton School, said the plunge might have burned the "momentum investors" who bet on market trends rather than individual stock performance.

"My feeling is that the market could continue upward again, and then it will be trading more on basic economics," Siegel said.

Ted Aronson, principal and founder of Aronson Johnson & Ortiz L.P., a Philadelphia money-management firm, noted that the sell-off began with a 9 percent drop in China's main stock index.

"Why didn't you ask about that Chinese stock market when it was going up 150 percent? Put it in perspective: That was too good to be true," Aronson said. "I'm not sure either of them have much to do with reality."

Echoing Davis' point about risk, Aronson also noted that investors had been speculating about a supposed decline in market volatility for weeks.

"That was all bull. Yes, volatility has gone down," Aronson said. "And in one fell swoop, it goes back up. Could we be returning to normal capital markets? I suspect maybe. But does it signify anything dire? I think not."

Contact staff writer Thomas Ginsberg at 215-854-4177 or

Inquirer writers Andrew Cassel and Jeff Brown contributed to this article.