• This is a rush transcript from "The Journal Editorial Report," March 3, 2007.

    PAUL GIGOT, FOX NEWS HOST: This week on the "Journal Editorial Report," a wild ride on Wall Street as stocks suffer their biggest one-day drop in years. Was the sell-off merely a routine correction or a sign of recession ahead? We'll tell you why this is not the time to panic.

    And Democrats pay their union dues. The House passes a bill that allows big labor to organize workers without giving them access to a secret ballot vote.

    We'll have the details after these headlines.

    (NEWSBREAK)

    GIGOT: Welcome to the "Journal Editorial Report." I'm Paul Gigot.

    U.S. stocks suffered their biggest one-day drop in years Tuesday after concerns about China and slower than expected growth here at home triggered a dramatic sell-off. Was it merely a market correction or a sign of recession ahead?

    Here to put it all in perspective is Brian Westbury, the chief economist for First Trust Advisors.

    Brian, welcome back to the program. Great to have you here.

    BRIAN WESTBURY, CHIEF ECONOMIST, FIRST TRUST ADVISORS: Great to be with you, Paul.

    GIGOT: Alan Greenspan, the main they used to call the maestro as chairman of the Federal Reserve, used the "R" Word, recession this week, said it's possible by the end of the year. Do you agree with him?

    WESTBURY: No, I don't. Let's put it this way. There is always the chance of a recession. There's a mistake that somebody could make. Ben Bernanke could make a mistake, the Congress could make a mistake and raise taxes too much and throw us into a recession. But if those kinds of mistakes don't happen, I think the odds of a recession today are very, low.

    GIGOT: Well, let's talk about some of these indicators. Durable goods were down. You got housing starts down. You have profits beginning to slow a bit. You have some jittery signs in world stock markets.

    WESTBURY: Right.

    GIGOT: What are the reasons you are more optimistic?

    WESTBURY: Yes, I think there are really three main reasons that I'm optimistic about the economy. One is a real long-term one, and that is ever since the early 1980's when we reformed the tax code and deregulated, we've had a huge surge in technology in the United States.

    This is boosted productivity. And this huge boost in productivity is lifting our economy. It has for 25 years. I think it will for the next 25 years.

    The second reason is the tax rates are still very low. The tax cut of 2003 is still in place. There is a chance we might have a few small tax hikes at the edges this year, but nothing major.

    And then the third reason is that I believe the Federal Reserve has not tightened too much. The way I put it is the Fed is not tight. They're just less loose.

    And when you put all of that together, strong productivity, low taxes and a pretty easy Fed, I think the economy is in great shape.