President Clinton disagrees. "The economy remains strong, on a sound foundation with a bright future," says Mr. Clinton.
Anecdotal evidence supports Mr. Bush. After taking losses on holiday sales for the first time ever, computer giant Gateway announced Friday it's cutting 3,000 jobs, or 10 percent of its workforce. And at retail broker Charles Schwab, with client trading is down by more than 20 percent, founder Charles Schwab and 750 executives are taking first quarter pay cuts.
Yet, despite the apparent slowdown, many economists agree with the president. The beleaguered Nasdaq was up 9 percent this week - its first winning week in more than a month, reports CBS News Business Correspondent Anthony Mason.
"President Bush is inheriting a good economy in a strong position," says MIT economist Lester Thurow. "And it's his to goof up."
Even if the economy is flirting with recession, the real concern is how to respond to it, Thurow says.
"A recession will be forgotten if it's quick, short & followed by a period of good economic performance," he says.
In his last economic report to Congress, sent Friday, Mr. Clinton fired a volley at his successor. The president cautioned against excessive tax cuts and spending increases, which he said could jeopardize the nation's prosperity.
While insisting he was "moving out of the policy business in just a few days," the president said those in the new administration and Congress should avoid a large tax cut or huge spending increases that could bring back deficit spending.
"I would hope that the combined total of the tax cut and spending plan would not be so large as to call our fiscal discipline into question," Mr. Clinton told reports Friday.
The president said that while the economy was slowing from its rapid pace of the past few years, most private forecasters continued to believe growth will be at a moderate level this year with no recession.
But in an interview with The Wall Street Journal, Mr. Bush offered a different analysis.
"I've got a relatively pessimistic view about what the economy looks like," he said. "If, in fact, the economy is slowing down, as the numbers are beginning to clearly show, the operative word is: How soft will the landing be?"
And Mr. Bush stuck to his insistence that a big tax cut is needed to stimulate the economy.
"We would consider all options" on when the reduction should take effect, he said. "What I won't consider is trying to diminish the size of the tax-relief package."
Mr. Clinton used the 402-page report to burnish his economic legacy, providing a detailed account of the gains the country has made during his administration, citing 22 million jobs created and the lowest unemployment rate in a generation.
The report containe the administration's final economic forecast in which it predicted that the expansion, already the longest in history at nearly 10 years, will last through this year and beyond.
The president-elect has repeatedly cited the economy's slower growth as increasing the need for Congress to move quickly to pass his $1.3 trillion tax cut.
Martin Baily, chairman of the president's three-member Council of Economic Advisers, said there was no reason to believe the economy was slipping into a recession, even with the sharp slowdown in economic activity in the past few months. He noted that the unemployment rate in December remained at 4 percent, near a three-decade low.
"We think the fundamentals are strong and we are not going into a recession," Baily said.
Despite the pay cut, Charles Schwab agrees.
"We're now beginning to see the world is not that bad at all, despite some recession signs," he says.