UCLA Anderson Forecast: No Recession Imminent For National Economy

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LOS ANGELES, April 2, 2007 - In its first quarterly report of 2007, the UCLA Anderson Forecast remains steadfast in its belief that the national economy does not face recession, though the group’s economists concede that length of the current, below trend growth period leaves them “increasingly nervous.” The Forecast in particular notes that, “ … the credit crunch in the subprime mortgage market will likely trigger a second leg down in the housing market in terms of output and prices.”

The Forecast asserts that the slowed economy may well endure longer than previously expected, but that better-than-expected consumption, a “less-negative” trade sector and at least two and possibly three rate cuts will keep Gross Domestic Product (GDP) positive throughout 2007.

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In his National report, UCLA Anderson Forecast Senior Economist David Shulman remains consistent with the story the Forecast has been telling for some time, that a recession is not imminent for the U.S. economy. However, Shulman concedes that the period of below average growth will last longer than previously believed before the economy returns to normal.

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The National forecast calls for real GDP to be 2.1%, 1.7% and 2.5% in the first, second and third quarters of 2007 (marking six quarters of below trend growth), then expects the economy to return to trend in the fourth quarter and in 2008, averaging 3.5% growth during that span. The unemployment rate is expected to rise from February’s 4.5% to 5.0% by the third quarter, then gradually decline.

http://www.uclaforecast.com/contents/archi...edia_4_07_1.asp