New economic base

Over the last two week (earnings season) we have heard many analysts make a comment similar to the following, "while earnings have beat estimates, revenue is down from last year and/or didn't hit the current estimate." This comment normally precedes a bearish statement along the lines of, well they can't cut costs forever and the economy is still weak.
What I think they are missing is the fact that the economy has contracted because of the great loss of consumer wealth and in comparison to the bubble days of 2007 it looks bad. However, assume you had a time machine and could go back to the economy of 7 years ago. Companies were certainly capable of making money and growing from that point. Now, if management has successfully resized to a level similar to one that existed seven years ago, what lies ahead?
Whether it is going to be this quarter, next quarter, or next year, I think everyone except a few people who believe Armageddon is coming, expect a recovery. Is it going to be a recovery that takes us back to 2007 levels in a matter of months? Probably not. However, if the economy and the agile companies have shrunk by 10-20% in reaction to recent events and we start to grow at 2-3%, that is still very bullish. Based on some assumptions I use it may take us until 2014 to regain 2007 levels, but so what? Companies can make money and are positioned to grow during those years from where they are now.
Take the auto industry. Near the peak they sold 16 million cars. If they shrink and retool to the point that they can be profitable selling 10 million cars, are they not a good investment? The fact that the industry was once bigger is simply a historical fact and certainly doesn't have much to do with current investment choices. Even more importantly, if they are profitable at that level and if over time demand goes up, they now actually have new growth potential. Yes, they are regrowing into areas they already occupied, but why does that matter?
If you accept that the economy has adjusted and is now smaller by some percentage, you need to make investment decisions based on the new reality, not some memories from a few years ago. The agility demonstrated by the managers of these companies is impressive and they have created new opportunities both for current earnings and for future growth. They seemed to adapt much faster than most of the commentators.