If you ever think something has come up in the forum before you should try out the search function before asking the question. However, I guess I'll still answer...

Economy picking is mixing sweep picking with alternate picking. If you pick down, and the next note is on the next string down, you follow through and sweep the next note. Vice versa for the upstroke. Perhaps this will clarify it. Above the tab is the economy picking pattern. Below is the alternate pattern for comparison purposes.


Ec: down down down up down up up down up up down
e|-------------12---14---15---14--------------------------
B|--------12-----------------------15---13---12-----------
G|---12-------------------------------------------14---12-
Alt: down up down up down up down up down up down


(I don't know if the above pattern sounds good or not, I'm just using it for illustration --- I don't even have a guitar around to try it out)

See which way you find easier. Basically, you follow through with the pick when you can. It's less motion (more economical, hence the name), however, there is more thought involved and I find it harder to use economy picking when improvising. Alternate picking, there is no thought, you can focus on the left hand. If mastered, though, economy picking would be faster than alternate, I think (though it's much harder to master). Hope this helps.