Brushing aside conventional wisdom, economists at the University of California, Los Angeles (UCLA) say the nation will survive the housing...
Brushing aside conventional wisdom, economists at the University of California, Los Angeles (UCLA) say the nation will survive the housing slump and job losses without plunging into recession — although it still will be miserable for many Americans.
“We are holding firm: no recession this time,” UCLA Anderson Forecast Director Edward Leamer said in a report being released Tuesday.
Many prominent economists and institutions, including Wall Street powerhouse Goldman Sachs and former U.S. Treasury Secretary Lawrence Summers, have declared the economy to be in recession. That is commonly defined as two consecutive quarters of decline in gross domestic product (GDP).
UCLA predicts that GDP will dip by 0.4 percent in the second quarter of this year, but then rebound.
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The Anderson Forecast expects GDP to be growing at 2.5 percent by the end of this year.
Leamer noted that UCLA bucked other forecasters in 2001 by correctly predicting that year’s recession.
“We got it right, and we stood alone back then,” he said. In jest, he added later that he had “submitted my resignation letter, in the event I am wrong.”
Whether truly in recession or not, Leamer said the economy would be sputtering. “The question is whether  will be disappointing or horrible; our forecast is ‘disappointing,’ ” he said.
But, “If there is a quick halt to consumer spending, we will for sure have a recession in 2008,” he added.