Credit & Debt: Housing Woes Drag Down Economy

Despite Ben Bernanke's protestations to the contrary, it seems that the housing slump is going to drag the economy down more than estimated:

Real gross domestic product, the government's broadest measure of economic output, is expected to advance 2.3 percent in 2007. That is down from an earlier estimate in February for 2.8 percent growth, a survey conducted by the National Association for Business Economics found. The lower forecast came after the government reported anemic 1.3 percent GDP growth during the first three months of this year..."Residential investment remains a dominant force dampening growth in 2007," NABE wrote, adding that almost half of those surveyed expect the bottom in housing will not be reached until the fourth quarter. A third of those surveyed think problems in the subprime market are delaying or deepening the housing correction.

This should come as no surprise to anyone who's been reading this blog, other blogs like it, or following the markets in general. Any time someone makes a prediction as to how long a bubble or bust will last, take that figure and tack on another six months to it. I like to call it the "Lereah Extra."

So buckle in, strap down, and hold tight for at least the remainder of 2007, because that's how long it's going to take for the market to flatten at bare--or is that bear?--minimum.

Posted at May 21, 2007 12:02 PM

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Despite Ben Bernanke's protestations to the contrary, it seems that the housing slump is going to drag the economy down more than estimated: Real gross domestic product, the government's broadest measure of economic output, is expected to advance 2.3 percent in 2007. That is down from an earlier estimate in February for 2.8 percent growth, a survey conducted by the National Association for Business Economics found. The lower forecast came after the government reported anemic 1.3 percent GDP growth during the first three months of this year..."Residential investment remains a dominant force dampening growth in 2007," NABE wrote, adding that almost half of those surveyed expect the bottom in housing will not be reached until the fourth quarter. A third of those surveyed think problems in the subprime market are delaying or deepening the housing correction. This should come as no surprise to anyone who's been reading this blog, other blogs like it, or following the markets in general. Any time someone makes a prediction as to how long a bubble or bust will last, take that figure and tack on another six months to it. I like to call it the "Lereah Extra." So buckle in, strap down, and hold tight for at least the remainder of 2007, because that's how long it's going to take for the market to flatten at bare--or is that bear?--minimum.