For some reason I feel that Alternate Picking, although it requires a lot more practice for me since you have to jump around strings, is much smoother than Economy Picking.

Is this only because I haven't practiced economy picking enough? When I practice it, it feels so awkward for some reason. But when I practice using alternate picking, it feels smooth.
Well, economy picking is supposed to be smoother. I think it depends on how natural it comes and how comfortable a person feels when they use it. Like when I was learning how to sweep, it was the most frustrating thing ever. Just keep practicing and try learning other techniques that can help your economy picking like sweep picking. I always thought sweep picking was easier.
Before a million economy pickers and alternate pickers show up and never shut up -

Economy Picking:
This technique is more fluid and more difficult to learn. People who use it say that they can play faster this way then with alternate picking, but I've never practiced it enough to say if
it works for me. It feels awkward because it's something you have to think about doing, kind of like first alternate picking. When practiced, I imagine that it is an easy natural motion.

Alternate Picking:
The preferred picking style for most guitarists - it's simple and easier to learn. Also, it helps you keep time because every note is picked opposite the last one. As such, string skipping is sometimes more difficult, but in a video of Paul Gilbert I was shown, PG actually stated that he preferred the simple back-and-forth motion of alternate picking to economy picking.
No vs theads please.

Neither is better than the other, if you are able to accent notes correctly then they will sound no different.

Which is better from person to person depends almost solely on the amount of practice you spend on each.
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Ideally, a person should learn both, as they both have slightly different sounds and feels, and one may be more appropriate for a certain lick than the other.

Personally, I'm an alternate picking junky. I just prefer how it feels/sounds. I even alt pick arpegios sometimes. I can't do it as fast as if I swept them, but I prefer the feel. But that's just me.
It depends on personal preference. The main differences are that economy picking sounds smoother, but you need your licks and runs to have an odd number of notes per string to work right. Alternate picking sounds more defined (not to say it can't sound smooth, but it definitely sounds harsher), but you don't have to worry about how many notes per string you're doing.
Yeah I have a friend who manages to use both pretty effectively, as was said above each method has it's advantages, though I myself being self taught managed to develop only strictly economy picking, I have no idea how. Though if a riff dictates I should use alternate, then I will.
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