On the one hand are the economists at UCLA: “…the housing collapse won’t cause a California recession because the sector is too small to cause the state’s overall economy to contract.”
On the other are many others: “…the housing woes are prompting consumers to cut back and making credit harder to get, putting the brakes on broader economic activity…a recession is already at hand.”
And in this case, we happen to be more with the “many others” than not.
∙ UCLA forecast sees no California recession [SFGate]
This guy is completely full of it. He talks about how the job losses have come from housing and retail industries then goes on to say that employment will flatten and rebound. However, it’s just a complete wild ass guess because he fails to suggest where these new jobs are going to come from. What sector is going to pull up the slack here? Housing and retail just went through tremendous boom cycles. They’re not going to just snap back.
What a moron. Shame on newspapers for picking it up, too. It’s no more credible than random blog drivel (like this post).
Well, after thinking about the state of the economy, I decided not to buy the Louis Vuitton Speedy Chronograph for +5k on Saturday (although Helena did make a very good case for the watching being an ‘investment’) and instead went with the more practical purchase of two pairs of Ferragamo shoes, which were substantially less, instead.
*I am leaving the watch purchase for my birthday in Oct*
The recession is already here, is it? Whew. And here I thought it might be pretty tough to deal with and stuff.
fluj, the man who jumps off of a building is still alive for a while until he hits the ground.
We just jumped off the building. We’re not anywhere near the bottom.
I’ve always found the UCLA forecast to be pretty balanced – I remember they were calling for a housing downturn way before anyone else. Don’t know if I agree with the forecast this time as the FIRE sector of the economy was a pretty major component of growth in most of the state since the dot com downturn.
how high is the building? a man could still survive a fall from a low building (with alot of pain of course) with some physical therapy he might even walk yet again.
maybe the man might fall onto someone else, therefore breaking his fall (but hurting both himself and the other person in the process)
@ Miles – subtle nuance here is that Christopher Thornburg, an economist noted for being a housing bear and calling this bubble long before it started deflating, was previously associated with the Anderson Forecast. He was the sole voice of balance amongst the “new paradigm” cheerleaders over there, and was the one calling for the downturn before others. Thornburg’s opinions weren’t very popular and he ended up leaving to join Beacon Economics.
UCLA’s is usually among the more bullish forecasts, in my opinion. I believe they correctly predicted that Sacramento home prices *may* fall 20% about 2 weeks after Sacramento prices had already fallen 20%. At that rate, they’ll likely forecast a recession about 2 weeks after it becomes a fait accompli.
We are already in a recession unfortunately. The housing market itself didn’t cause it directly…just the deleveraging in the debt markets caused overall lending to dramatically contract..slowing money for business. In short, a credit debacle…the Fed moves today might help but should not be lost on anyone that the most powerful central bank in the world was forced to commit over 25% of its entire balance sheet to do this. One has to ask, what happens if it doesnt work.
Regarding the economists at UCLA:
I wonder if being in Westwood can effect ones perception.
Agree with Dude. Thornberg has been predicitng a recession for a while. Here’s a video of a presentation he did back in 2006 at the UCSD Economics Roundtable. It’s fairly long, but very informative.
http://video.google.com/videoplay?docid=-2640239019877885520
Thanks for the correction on the UCLA forecast re Thornberg – I do remember the personnel change a while back and didn’t realize it shifted their bias. I’ll have to keep an eye out when he’s in the news from now on (along with Ken Rosen). Thornberg seems to be right on the money – I found his 3 part video lecture he did at Humboldt in late 2006 to be really informative and ahead of its time.
http://www.youtube.com/watch?v=uyOWuczlJCA
It didn’t take magic to predict the housing bust.
Many non experts as well as experts saw this coming; hence, not something I’d hang my hat on.
RE:
On the one hand are the economists at UCLA: “…the housing collapse won’t cause a California recession because the sector is too small to cause the state’s overall economy to contract.”
Response: housing collapse + other factors, but the housing market is the anchor.
“It didn’t take magic to predict the housing bust.
Many non experts as well as experts saw this coming; hence, not something I’d hang my hat on.”
Very true, but it is equally true that the vast majority of economists and ordinary people did NOT see it coming.
But appropos of your observation, I think we are getting to that thid stage of knowledge that Schopenhauer referred to in the famous quote:
“All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Last, it is accepted as self-evident [various translations].”
Very true Satchel, I think Deflujional is still in Stage One.
If I see a prompt to cut back what will happen if I click ‘No’?