UCLA: No Recession, Only "Recession Depression"

LOS ANGELES--In its first quarterly report of 2008, released March 11, the UCLA Anderson Forecast remains confident that the national economy was not in a recession through January 2008 and continues to forecast weak growth but no official recession in 2008.

In his national report, UCLA Anderson Forecast director Edward Leamer holds to his belief that the U.S. economy is not in a recession and that there is no recession to be feared in the immediate future, while admitting that there is a tenuous aspect to forecast.

"Our no-recession forecast remains nervously intact. We see a lot of problems in the first half of 2008, as housing remains a drag on GDP growth and weakness in personal consumption contributes as well," he writes. "We expect one quarter of negative GDP growth. The Fed continues to dish out good news for Wall Street with ever lower interest rates. The labor market is sluggish and unemployment elevates to 5.5% by the end of 2008. But the housing drag on GDP dissipates in the second half of the year and a normal economy returns in 2009."

"But until I see evidence of a decline in spending by consumers and businesses because of credit problems," he writes, "I am going to believe that this is just another symptom of 'recession depression.' Main Street is doing well, even as Wall Street suffers."

See LA Times story here and San Diego Tribune story here.

(HT: Newmark's Door)