Post by unlawflcombatnt on Jan 7, 2008 18:55:17 GMT -6
from Bloomberg
Feldstein Says Recession Odds More Than 50%
By Steve Matthews
January 7, 2008
"Harvard University economist Martin Feldstein, head of the group that dates U.S. economic cycles, said the
odds of a recession have risen to more than 50% after a report showing unemployment jumped in December.
"We are now talking about more likely than not,'' Feldstein, president of the National Bureau of Economic Research (NBER), said in an interview in New Orleans two days ago. "I have been saying about 50%. This now pushes it up a bit above that.''
The jobless rate rose to 5% in December, the highest in two years, from 4.7% in November, a government report showed last week. Payrolls rose by 18,000, the least since August 2003.
The U.S. economic expansion is cooling after a third- quarter surge as the housing slump enters its 3rd year and consumer spending slows. Former Federal Reserve Chairman Alan Greenspan and ex-Treasury Secretary Lawrence Summers are among those raising the prospect of a recession....
"Consumers, with essentially no growth in jobs in December, are going to be more nervous about the future,'' said Feldstein, 68. "They are going to be a little more reluctant to spend, and that is going to put a further drag on growth in 2008.''....
The economy is heading for "one of the worst recessions we've had in a while,'' investor Jim Rogers said in a Bloomberg Television interview today from Singapore. He said investors should sell the dollar as global currencies weaken....
"They have to keep lowering rates,'' Feldstein said. A reduction of 1/2 a percentage point in the federal funds rate, which banks charge each other for overnight loans, would ``not be a bad thing at this point.''...
Rate cuts alone may not be enough to keep the economy growing, Feldstein said. He said Congress may have to cut taxes to stoke consumer spending.....
"I am not sure that reduction in rates is going to have as much traction as it did in the past because so much of the problems now are problems of confidence in the financial sector and of bank capital,'' he said. "So that is why I have been saying we need some kind of a fiscal stimulus.''
Housing starts fell 3.7% in November from October and were 48%* below their January 2006 peak, according to a Commerce Department report last month.
``Housing starts have collapsed, so you have low construction, low household wealth and that is now beginning to accumulate and to shift over into reductions in the growth of employment and therefore in the growth of incomes,'' Feldstein said....
Feldstein has headed the NBER, which like Harvard is based in Cambridge, Massachusetts, since 1984. He also served in the post from 1977 to 1982...."
------------------------------
*
New Home Sales have dropped more than Housing Starts.
New Home Sales have declined -54% from their peak—from an annualized 1.410 million in July of 20051 to 647 million in November 20072.
1. biz.yahoo.com/c/ec/200534.html
2. biz.yahoo.com/c/ec/200752.html
Feldstein Says Recession Odds More Than 50%
By Steve Matthews
January 7, 2008
"Harvard University economist Martin Feldstein, head of the group that dates U.S. economic cycles, said the
odds of a recession have risen to more than 50% after a report showing unemployment jumped in December.
"We are now talking about more likely than not,'' Feldstein, president of the National Bureau of Economic Research (NBER), said in an interview in New Orleans two days ago. "I have been saying about 50%. This now pushes it up a bit above that.''
The jobless rate rose to 5% in December, the highest in two years, from 4.7% in November, a government report showed last week. Payrolls rose by 18,000, the least since August 2003.
The U.S. economic expansion is cooling after a third- quarter surge as the housing slump enters its 3rd year and consumer spending slows. Former Federal Reserve Chairman Alan Greenspan and ex-Treasury Secretary Lawrence Summers are among those raising the prospect of a recession....
"Consumers, with essentially no growth in jobs in December, are going to be more nervous about the future,'' said Feldstein, 68. "They are going to be a little more reluctant to spend, and that is going to put a further drag on growth in 2008.''....
The economy is heading for "one of the worst recessions we've had in a while,'' investor Jim Rogers said in a Bloomberg Television interview today from Singapore. He said investors should sell the dollar as global currencies weaken....
"They have to keep lowering rates,'' Feldstein said. A reduction of 1/2 a percentage point in the federal funds rate, which banks charge each other for overnight loans, would ``not be a bad thing at this point.''...
Rate cuts alone may not be enough to keep the economy growing, Feldstein said. He said Congress may have to cut taxes to stoke consumer spending.....
"I am not sure that reduction in rates is going to have as much traction as it did in the past because so much of the problems now are problems of confidence in the financial sector and of bank capital,'' he said. "So that is why I have been saying we need some kind of a fiscal stimulus.''
Housing starts fell 3.7% in November from October and were 48%* below their January 2006 peak, according to a Commerce Department report last month.
``Housing starts have collapsed, so you have low construction, low household wealth and that is now beginning to accumulate and to shift over into reductions in the growth of employment and therefore in the growth of incomes,'' Feldstein said....
Feldstein has headed the NBER, which like Harvard is based in Cambridge, Massachusetts, since 1984. He also served in the post from 1977 to 1982...."
------------------------------
*
New Home Sales have dropped more than Housing Starts.
New Home Sales have declined -54% from their peak—from an annualized 1.410 million in July of 20051 to 647 million in November 20072.
1. biz.yahoo.com/c/ec/200534.html
2. biz.yahoo.com/c/ec/200752.html