Charles Plosser, president of the Federal Reserve Bank of Philadelphia, delivered some sobering words about the economy today. He expects growth to be weak in the first half of this year, and he's concerned that slow growth will not be enough to stave off inflation. Bad numbers are coming, he predicts, without mincing words.

Plosser, who as recently as November said that the Federal Reserve might need to reverse its interest-rate cuts in order to combat rising prices, now seems to suggest that further cuts may be warranted. "A substantially weaker outlook than expected, particularly if that weakness is projected to be more prolonged than anticipated, may require further adjustments to policy," he said in prepared remarks.

However, Plosser expects housing to bottom out in the middle of the year and economic growth to pick up during the last two quarters.

But just how bad is the economy today?

Is the economy resilient, as President Bush said yesterday? Or are we in a recession, as economists at Morgan Stanley and Merrill Lynch reported yesterday? Or is the economy, as Treasury Secretary Henry Paulson tells it, merely experiencing slower growth?

Part of the problem, of course, is that we simply cannot know the current state of affairs. We won't know how bad the fourth quarter was until the end of January, and even those numbers will be subject to revisions. Plosser reminds us of the lag in effects of monetary policy: Any change in rate cuts today is too late to have any effect on the first half of 2008, he says.

But the rearview-mirror effect won't stop analysts from trying. Yesterday, Merrill Lynch economist David Rosenberg published a report concluding that the economy is officially in recession. This past Friday's weak employment report was the tipping point.

Economists who still predict a 50 percent chance of recession, or those who say the economy is "recessionary" or "recession-like," Rosenberg says, are simply in denial. "One can speak euphemistically if one chooses, but there are no substitutes for outright 'recessions'—to say that the backdrop is 'recession-like' is akin to an obstetrician telling a woman that she is 'sort of pregnant,'" he writes.

Rosenberg predicts that the current downturn will end by late summer, but the official "dating recession committee" at the National Bureau of Economic Research won't likely tell us we were in a recession in January 2008 for two more years.

Morgan Stanley economists Richard Berner and David Greenlaw also believe that we are currently in a recession, but think it will be "mild and short."

President Bush struck a careful balance in his speech on the economy yesterday. He is considering whether or not to propose more tax cuts or spending increases to spur growth, and many expect him to make an announcement about any such measures during his State of the Union address at the end of this month.

Paulson delivered what may be called his "most bearish speech ever" yesterday, but he refrained from uttering the dreaded R-word that Morgan Stanley and Merrill Lynch are now yelling from the mountaintops.

Of course, the rhetoric on the state of the economy might be fun banter for economists, but it is insignificant to those consumers who find themselves aghast at the gas pumps and troubled by their falling home prices. They want to know if relief is on the way.

Any proposals set forth by President Bush would likely have a difficult journey through Congress, particularly during an election year. And as the Federal Reserve faces an increasingly challenging environment for policymaking, there simply is no answer for those struggling consumers.

At least, not one they want to hear.