GAME, point, and possibly even match to Fed chairman Alan Greenspan. When he and his monetary policy committee raised interest rates by only 0.25 percent a few weeks ago, the inflation hawks were out in force. The economy, they said, was overheating, and the Fed chairman, wedded to the view that rising productivity would keep costs and prices under control, was refusing to take the vigorous action necessary to head off an impending inflationary surge. Rates should have been raised sooner and faster, they argued.

In the event, it turns out that Greenspan had it right. Late last week the government reported the largest drop in wholesale prices in a year, with energy and food leading the declines with declines of 1.6 percent and 0.6 percent, respectively. Excluding those volatile elements, "core" wholesale prices rose only a modest 0.2 percent in June. Consumer prices also showed no signs of the inflation that so worries the hawks: core inflation rose a tiny 0.1 percent.

Further support for Greenspan's refusal to panic and raise rates came from news that industrial production fell 0.3 percent in June, that the capacity utilization rate dropped from 77.6 percent in May to 77.2 percent in June, and that retail sales fell by 1.1 percent last month, the largest monthly drop in 16 months, pulled down by a 4.7 percent plunge in auto sales.

None of this necessarily means that the economy is stalling: Despite the June drops, sales and production were up 6.3 percent and 5.6 percent, respectively, year-on-year. Even the pessimists are expecting growth to come in at 3.5 percent in the second half of the year. In addition to the fact that one month's data do not make a trend, especially when we are dealing with highly volatile series, there are signs that the recovery still has strong legs.

BOTH THE PHILADELPHIA and New York factory indexes rose sharply this month, leading David Heuther, chief economist at the National Association of Manufacturers to exult, "Manufacturers are experiencing the best times they have had in five years." And corporations are awash in cash. BusinessWeek reports that at the end of the first quarter its sample of 374 of the 500 companies in the Standard & Poor's Index of share prices were holding $555.6 billion of cash and short-term investments, $56 billion more than they were sitting on at the end of last year, and double what they had at the end of 1999.

Two factors suggest that these companies will start to whittle down their cash hoards in the second half of the year. The first is the mounting optimism of the nation's CEOs. The Conference Board reports that more than 90 percent of these corporate heads believe the economy has improved. The second reason that corporations are likely to dip into their cash is that they will want to avail themselves of the depreciation allowances that will be expiring at year-end. Why put off until next year what you can save money by spending now?

Add optimistic reports from Dell, IBM, and other hardware manufacturers, and complaints from trucking firms that they can't find enough drivers to handle the increasing demand, and you hardly have a picture of unrelieved gloom in the sector.