Post by unlawflcombatnt on Sept 14, 2007 2:39:23 GMT -6
from SignOnSanDiego:
Economy nearing cusp of recession
Experts predict sustained period of slow growth for U.S.
By Dean Calbreath
UNION-TRIBUNE STAFF WRITER
9/12/07
"Over the next six months, the U.S. economy will be at a near-recessionary stall, with unemployment rising and the real estate market still staggering, according to projections released today by a panel of economists at the University of California Los Angeles.
In California, job growth will average 0.7 percent over the next year – far less than the growth rate of the working population. As a result, unemployment will rise from the 5.3 percent to 5.9 percent in the second half of next year, said the economists, collectively known as the Anderson Forecast.....
“Such an economic performance is almost as close as you can get to avoid the technical definition of a recession,” UCLA economist David Shulman said. He added that with growth dipping so low, the economy “runs the risk of falling into an actual recession, just as when an airplane's velocity dips down to its 'stall speed' and falls out of the sky.”
Other economists have quibbles with some details of the forecast. But they agree that the economic picture is likely to worsen in coming months because of a rising number of foreclosures, more layoffs in the real estate industry and cutbacks in consumer spending....
Stephen Levy, director of the Center for the Continuing Study of the California Economy in Palo Alto, said he largely agrees with the Anderson Forecast's assessment.
“Next year is going to be sluggish, and it will be a couple years before the economy turns around,” he said. “As far as whether the economy will be in recession or near-recession, it's hard for an ordinary person to tell the difference.”
As has been true for the past couple of years, problems with the residential real estate market are at the center of the Anderson Forecast's glum report. And the economists say the market looks worse than it did just a few months ago...
“Housing could take two, three or four years to recover, depending on how fast the prices adjust,” Levy said. “Some of the excess in the market has to be worked out. But it would be worse for San Diego and California if housing prices did not adjust. We can't sustain the kind of job growth that we need as a state if prices stay at the level they are now.”
In the short term, however, lower housing prices mean less home building, which translates into fewer jobs for construction workers, mortgage brokers and real estate brokers.
UCLA economist Ryan Ratcliff noted that from the first quarter to the second quarter, employment in California grew only 0.5 percent on an annualized basis. The growth rate was dragged down by 11,500 job losses in construction and 5,500 in finance, mostly related to real estate. At the same time, the unemployment rate rose from 4.8 percent in January to 5.3 percent in July....
Nationwide, the real estate slowdown has resulted in a cutback in spending on big-ticket items, especially cars. Shulman projected that only 15.7 million vehicles will be sold next year, the lowest number since 1998. In addition, he said, cutbacks in spending on furniture and appliances – which are often tied to new-home purchases – will lead to a decline in total consumer spending...."
Economy nearing cusp of recession
Experts predict sustained period of slow growth for U.S.
By Dean Calbreath
UNION-TRIBUNE STAFF WRITER
9/12/07
"Over the next six months, the U.S. economy will be at a near-recessionary stall, with unemployment rising and the real estate market still staggering, according to projections released today by a panel of economists at the University of California Los Angeles.
In California, job growth will average 0.7 percent over the next year – far less than the growth rate of the working population. As a result, unemployment will rise from the 5.3 percent to 5.9 percent in the second half of next year, said the economists, collectively known as the Anderson Forecast.....
“Such an economic performance is almost as close as you can get to avoid the technical definition of a recession,” UCLA economist David Shulman said. He added that with growth dipping so low, the economy “runs the risk of falling into an actual recession, just as when an airplane's velocity dips down to its 'stall speed' and falls out of the sky.”
Other economists have quibbles with some details of the forecast. But they agree that the economic picture is likely to worsen in coming months because of a rising number of foreclosures, more layoffs in the real estate industry and cutbacks in consumer spending....
Stephen Levy, director of the Center for the Continuing Study of the California Economy in Palo Alto, said he largely agrees with the Anderson Forecast's assessment.
“Next year is going to be sluggish, and it will be a couple years before the economy turns around,” he said. “As far as whether the economy will be in recession or near-recession, it's hard for an ordinary person to tell the difference.”
As has been true for the past couple of years, problems with the residential real estate market are at the center of the Anderson Forecast's glum report. And the economists say the market looks worse than it did just a few months ago...
“Housing could take two, three or four years to recover, depending on how fast the prices adjust,” Levy said. “Some of the excess in the market has to be worked out. But it would be worse for San Diego and California if housing prices did not adjust. We can't sustain the kind of job growth that we need as a state if prices stay at the level they are now.”
In the short term, however, lower housing prices mean less home building, which translates into fewer jobs for construction workers, mortgage brokers and real estate brokers.
UCLA economist Ryan Ratcliff noted that from the first quarter to the second quarter, employment in California grew only 0.5 percent on an annualized basis. The growth rate was dragged down by 11,500 job losses in construction and 5,500 in finance, mostly related to real estate. At the same time, the unemployment rate rose from 4.8 percent in January to 5.3 percent in July....
Nationwide, the real estate slowdown has resulted in a cutback in spending on big-ticket items, especially cars. Shulman projected that only 15.7 million vehicles will be sold next year, the lowest number since 1998. In addition, he said, cutbacks in spending on furniture and appliances – which are often tied to new-home purchases – will lead to a decline in total consumer spending...."