WASHINGTON (Reuters) — Call it the recession that wasn’t. With the US economy apparently pulling out of the tailspin it entered last year, the outlines of the recession are becoming clearer. And it looks set to go down in the annals as the mildest downturn in US post-war history. But the very shallowness of the recession has left some wary. Though painful, recessions often serve a useful purpose by exposing excesses in the economy and reining them in. Whether that happened this time is unclear to some analysts.

Stock prices, by some measures, remain overvalued and factories are running at low levels of total capacity. Consumer debt is high with consumers loaded up with $1.645 trillion of credit as of December, Federal Reserve statistics say. The forward 12-month stock price-to-earnings ratio for the Standard & Poor’s 500 index is now just over 27, not far from a peak of nearly 31 in 1999 and up from just under 23 when the stock market hit a three-year low in the wake of the September 11 attacks, according to Phoenix, Arizona-based StockVal. And the Fed last week said US industrial capacity in use fell to 74.2 percent last month, its lowest since April 1983.

Even before the fourth quarter logged a surprise 0.2 annual growth rate, defying projections of a negative reading, analysts had been thinking the recession would be, statistically speaking, relatively mild. The National Bureau of Economic Research, regarded as the official arbiter for business cycles, has dated the beginning of the recession to March 2001, exactly ten years after the recovery from the 1990-1991 recession began. Using quarterly gross domestic product figures, the drop in output for this recession was about 0.3 percent, even lower than the 0.6 percent decline in the 1969-1970 recession, which had been until now the most diminutive downturn in the post-war period. Victor Zarnowitz, a member of the NBER’s six-member dating panel, said a better measure for the severity of recessions is the monthly index of coincident indicators, meant to capture present economic activity. But even by that measure, the 2001 recession was puny. According to Zarnowitz, the index of coincident indicators has fallen by only one percent since the recession started. In the 1969-1970 downturn, it fell by two percent, he said.

But Zarnowitz warned that a recession should also be judged by duration and how widespread its effects on the economy are. One byproduct of the small recession, or “recessionette,” as one economist has labelled it, may be a smaller rebound as the economy recovers. “The recovery will be muted because the recession was muted,” said David Orr, former chief economist with Wachovia Securities in Charlotte, North Carolina. Orr said the recession did not squeeze out all of the US economy’s excesses, including high stock prices, consumer debt and a strong dollar. In most downturns, all three of those usually head lower. But Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania, was a bit more upbeat, saying the walloping stocks have taken since 2000 has absorbed much of the recession’s impact. He said the sectors that were overbuilt in the upturn, including high-tech, have suffered even as the rest of the economy has managed to keep its momentum.

He praised the Fed for raising interest rates during the boom to stem inflation, even though many have said those hikes hurt the economy. Likening the process to fighting forest fires with “controlled burns” of selected areas, Naroff said: “In this case, the US Park Service was setting the fires in the right places.”