How Bad Can Housing Crisis Get?
You might be wondering just how bad can the housing crisis get? The short answer is: probably much worse than you now think.
The National Association of Homebuilders, as you might suspect, keeps a close eye on the nation’s economic trends. The following is from one of their recent reports.
===========================================
The Economy Skates Close to Recession
GDP revisions for the fourth quarter of 2007 left the overall economic growth rate at a meager 0.6%, but the estimated contraction in residential fixed investment deepened to a 25.2% annual rate and RFI subtracted a whopping 1.25 percentage points from the GDP growth rate.
The housing contraction weighed on GDP growth from other directions as well, including the reeling housing finance system and components of retail sales closely related to housing market activity.
Available data, including housing starts and building permits for January and February, point toward another sharp contraction in RFI and another very weak GDP growth rate in the first quarter of this year, a pattern that skates dangerously close to recessionary conditions.
We now view a mild recession as a nearly even bet, but we also believe that aggressive actions by the Fed and the recently enacted economic stimulus package virtually guarantee stronger growth by the second half of the year.
To see more go to NAHB
=========================================
Note that the NAHB forecasters still take the common view that things will pick up in the second half of the year. Most economists, government leaders, and the average consumer is, in my opinion, still in denial as to how deep and prolonged this downturn will be.
Read the full article...
