LOS ANGELES—The U.S. economy will suffer as the slumping housing market eats away at job creation and consumer spending, but the nation should avoid slipping into a recession this year, according to a new economic report.
A recession could still happen though, if the credit crisis that has stifled the housing market deepens, preventing consumers from buying big-ticket items like cars and businesses from spending on equipment, according to the quarterly Anderson Forecast by the University of California at Los Angeles.
“We don’t see that happening,” said Edward Leamer, director and co-author of the forecast released Tuesday. “This is a tough call, but I will be very surprised if this thing actually precipitates into recession.”
The forecast anticipates job growth remaining sluggish in 2008, with the U.S. unemployment rate rising to 5.5 percent by the end of the year. The February rate was 4.8 percent.
The forecast expects the economy to post gross domestic product growth of about 1.5 percent this year, rising to about 3 percent growth in 2009. GDP grew 2.2 percent in 2007, the weakest showing in five years.
The no-recession forecast runs counter to the outlook among many economists and financial pundits, who contend the economy has already started to shrink amid rising unemployment, job losses, record oil prices, and the lingering effects of the housing and credit crises.
The U.S. lost 63,000 payroll jobs last month, the second consecutive month of job losses. The last time the U.S. posted a two-month drop in payroll jobs was in 2003, when employers were still struggling through the aftermath of the 2001 recession.
Leamer said the nation may be experiencing negative economic growth in the current quarter. Economists generally look for at least two consecutive quarters of negative growth before they make a recession determination.
Source: Denver Post
[Emphasis mine throughout the article–TP]
Of course, for Democrats, it is already settled science that we are in a recession, if not an outright depression. I expect that their report on the death of the American Economy is greatly exaggerated, like all those types who have been calling for a Financial Catastrophy since the 1980’s.
Dow Jones Industrial Average since 1900.