NAHB Hopes For No Recession
The NAHB (National Association of Home Builders) says that there will probably not be a recession next year but then goes on to forecast an economic close call.
Looking ahead, it seems to me that it will be almost impossible to avoid a recession during 2008. While Senator Clinton and others are calling for another bail out plan to save the housing market and over extended leaders and borrowers the extension of more credit to solve problems caused by an over extension of credit seems to be a dangerous way to try and correct imbalances in the allocation of capital.
A recession, as painful as it might be, especially to home builders, will be required to flush out the excesses of the past many years. Since the excesses were so excessive it is likely that a deep recession will take place no matter how hard the government tries to prevent it.
The article from the NAHB follows ===============
Economic Recession Will Most Likely Will Be Averted
The late-2007 downshift in economic growth reflects, to some degree, inevitable weakening of some GDP components, exports and business inventory investment, that displayed temporary growth spurts in the third quarter.
Furthermore, the housing downswing has continued to deepen and the fourth-quarter hit to GDP growth is likely to be even heavier than in the third quarter.
Finally, we’re now looking at a substantial unanticipated slowdown in growth of consumer spending, a sector that accounts for about 70% of total GDP.
Everything considered, we’re now estimating GDP growth of only 0.5% in the fourth quarter, not far from the recessionary red zone, and we’re also projecting decidedly sub par growth early next year.
Indeed, we’re now pegging the probability of economic recession within the next 12 months at 40%, up from 30% a month ago, and we believe that monetary stimulus by the Federal Reserve will be needed to keep the economy in the black during the coming year.
End of Article =============================
It surely seems to be that the NAHB economists are only hoping, not looking at the data and coming to proper conclusions.
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