NEW YORK (CNN/Money) - Sir Alan may be bravely trying to convince us -- and himself -- that the economy is heading for a healthy rebound. But when you look at his testimony to Congress Thursday there are plenty of signs that the Fed chairman is anything but convinced that this forecast is about to come true.

Now, he did list all kinds of reasons why the economy SHOULD pick up this year: interest rates have remained low, financial markets are in better shape (e.g., stocks have staged a big move off the lows), people can easily take equity out of their homes to spend on other stuff, and oil prices have dropped about 10 bucks since the end of the war in Iraq.

But in the same breath almost, he points out that natural gas prices have risen sharply. And he also admits the obvious in typical, understated, central-bank speak: Data on labor markets and production have been "disappointing." To say the least (!): jobs lost in six of the past eight months, new and continuing claims for jobless benefits at painfully high levels, and industrial production down the past two months in a row.

Even when he extols the fact that labor productivity is still growing in this sluggish economy he has to admit the obvious problem. He notes that businesses are still finding ways to reduce costs (that's good), "especially labor costs" (that's not good if firms are laying off workers!) and that's why labor markets are weak.

How sure is the Fed chief that the economy is going to grow faster? Looking ahead, he says the mainstream forecast for a pickup in economic activity "is not unreasonable." Not unreasonable. Is that sort of like saying, yeah, it could happen but I'm not at all sure it will? Damning the forecast for growth with faint praise?

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As for the "central question about the outlook," will business investment pick up now that the war is over, Mr. G. found a couple of "modestly encouraging" signs. One, a pickup in non-defense capita goods orders excluding aircraft and earnings reports showing profits on the mend. But he also said firms remain reluctant to spend and hire and that caution could hold the economy back.

So what's going on here? Is the chairman as sanguine as so many of the pundits concluded? Or was he just trying to sound that way?

According to Ned Riley of State Street Global Advisors said, "I do think he's trying to pull a leadership role here a little more than being the economist, and that leadership is trying to get people upbeat."

Now, it's true that his prepared remarks did not even utter the dreaded "D" word, deflation, that insidious condition when the economy is so weak that prices are falling, profits are getting clobbered, debts are getting harder to pay, and people are losing their jobs. He just repeated his worry about an inflation rate that's already too low getting even lower. Folks, with core inflation up just 1.5% over the past year, and up only 0.6% annualized over the past three months, he's worried.

And when questioned, he admitted as much. He said the risk of deflation is minor, true, but he said the Fed is studying the issue carefully and is ready to take steps to make sure it doesn't occur. The bond market knows he means buying up lots of government bonds to flood money into the economy. And he said it's the risk of deflation that threatens -- maybe -- to force the Fed to take action. More rate cuts? Buy bonds if that doesn't work.

Let's hope we never find out and the economy does pick up.

Anivran Banerji of the Economic Cycle Research Institute applauded Greenspan's testimony. He says the Fed chief managed to make this "reassuring" forecast for the economy to pick up -- that's good for stocks -- and he still held out the danger of deflation, which causes bonds to rally and pushes down interest rates. And that will make it cheaper for businesses to borrow. And that will help get the economy going.

That's probably what Mr. G is hoping, too. But it's pretty clear that he, like many others, is waiting to see proof that the economy really is picking up steam, and keeping his fingers crossed.