Recession will be nasty and deep, economist says

[Guest guest]

" Zepp " <zepp

Wed, 23 Aug 2006 18:19:14 -0700

[Zepps_News] #Marketwatch warns of " nasty and deep " recession

starting about now

 

 

 

http://www.rawstory.com/showoutarticle.php?src=http%3A%2F%2Fwww.marketwatch.com%\

2FNews%2FStory%2FStory.aspx%3Fdist%3Dnewsfinder%26siteid%3Dmktw%26guid%3D%7BE18E\

95AF%2DDBFF%2D4EE4%2DACF7%2D530A3CD714D3%7D%26symbol%3D

 

 

 

[Zeppnote: This is all the Democrats' fault, you know. They LET Putsch

and his gang screw it all up. If they had exercised a little bit of

discipline, it would never have happened!]

 

 

 

 

Recession will be nasty and deep, economist says

Housing is in a free fall and is pulling the economy down with it,

Roubini says

 

By Rex Nutting, MarketWatch

Last Update: 4:59 PM ET Aug 23, 2006

 

WASHINGTON (MarketWatch) - The United States is headed for a recession

that will be " much nastier, deeper and more protracted " than the 2001

recession, says Nouriel Roubini, president of Roubini Global Economics.

Writing on his blog on Wednesday, Roubini repeated his call that the

U.S. would be in a recession in 2007, arguing that the collapse of

housing will bring down the rest of the economy.

Roubini wrote after the National Association of Realtors reported

Wednesday that sales of existing homes fell 4.1% in July, while

inventories soared to a 13-year high and prices flattened out

year-over-year.

" This is the biggest housing slump in the last four or five decades:

every housing indictor is in free fall, including now housing prices. "

— Nouriel Roubini, president of Roubini Global Economics.

" This is the biggest housing slump in the last four or five decades:

every housing indictor is in free fall, including now housing prices, "

Roubini said. The decline in investment in the housing sector will

exceed the drop in investment when the Nasdaq collapsed in 2000 and

2001, he said.

And the impact of the bursting of the bubble will affect every

household

in America, not just the few people who owned significant shares in

technology companies during the dot-com boom, he said. Prices are

falling even in the Midwest, which never experienced a bubble, " a scary

signal " of how much pain the drop in household wealth could cause.

Roubini is a professor of economics at New York University and was a

senior economist in the White House and the Treasury Department in the

late 1990s. His firm focuses largely on global macroeconomics.

While many economists share Roubini's concerns about the imbalances in

the global economy and in the U.S. housing sector, he stands nearly

alone in predicting a recession next year.

Fed watcher Tim Duy called Roubini the " the current archetypical

Eeyore, " responding to a comment Dallas Fed President Richard Fisher

made last week in referring to economic pessimists as " Eeyores " (after

Winnie the Pooh's grumpy friend).

" By itself this slump is enough to trigger a U.S. recession: its

effects

on real residential investment, wealth and consumption, and employment

will be more severe than the tech bust that triggered the 2001

recession, " Roubini said.

Housing has accounted, directly and indirectly, for about 30% of

employment growth during this expansion, including employment in retail

and in manufacturing producing consumer goods, he said.

In the past year, consumers spent about $200 billion of the money they

pulled out of their home equity, he estimated. Already, sales of

consumer durables such as cars and furniture have weakened.

" As the housing sector slumps, the job and income and wage losses in

housing will percolate throughout the economy, " Roubini said.

Consumers also face high energy prices, higher interest rates, stagnant

wages, negative savings and high debt levels, he noted.

" This is the tipping point for the U.S. consumer and the effects will

be

ugly, " he said. " Expect the great recession of 2007 to be much nastier,

deeper and more protracted than the 2001 recession. "

He also sees many of the same warning signs in other economies,

including some in Europe. End of Story

Rex Nutting is Washington bureau chief of MarketWatch.

 

--

" Now, by the way, any time you hear the United States government

talking

about wiretap, it requires -- a wiretap requires a court order. Nothing

has

changed, by the way. When we're talking about chasing down terrorists,

we're

talking about getting a court order before we do so "

-George W. Bush, April 20, 2004

 

Not dead, in jail, or a slave? Thank a liberal!

Pay your taxes so the rich don't have to.

 

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