Risk of U.S. recession growing: HSBC

yahoo news ^ | 9-8-06

[SaxxonWoods]

It looks like we are entering another time much like the Reagan era "rolling recessions" of the mid-80s. Some regions of the country will expand economically, while others contract.

The coasts look weakest, due to adjustment of real estate values following the recent boom in prices. The South looks pretty good, money is chasing toward the cheaper real estate found is those areas. The Central/West is doing pretty well as a result of fairly valued real estate and the energy boom.

Oil prices will not decline enough to stop the energy expansion, OPEC is already lowering production.

Since most big media is on the coasts, the situation will be painted as dire, even though this is a continuation of a cycle that has been taking place for several decades.

If the prediction of 1.9% growth is correct (which I doubt, 2.5% is more likely), lower interest rates are coming, which will help real estate even more in the Central/West/South.

Sorry to carry on for so long, but it's my business to predict these matters, and I would be out of business by now if I had been wrong too often over the last 25 years. Time will tell, as always, and I only have to be reasonably close to survive, since mid-course adjustments can be made.

[Always Right]

Who are these "economists"? They are partisan hacks in my estimation.

See post 20. They were predicting a recession and housing bubble to burst back in July 2004. Boy, did they nail it.

[Labyrinthos]

I see you love talking down the economy just like a good little democrat.

How is this "talking down the economy?" Only an idiot would think that economies always grow and that recessions are avoidable. Like it or not the business cycle is here to stay. A recession may or may not be imminent. If it is, then look at it as an investment oppurtunity rather than a negative.

[Always Right]

Why? Would gain could HSBC possibly see in talking down the US economy?

Who knows, but they have been doing it for several years now. One of these days they may be 'right'.

[verity]

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[DontBelieveAugPolls]

I am not 100% certain that consumers would reduce their spending if their home values fell.

The wealth effect is dubious at best.

The collpase in the stock market in 2000-2002 didnt reduce consumer spending one bit

[Toby06]

Check out Hydro's posting history & get back to me. Incessant doom & gloom prognostication. The definition of "talking down the economy".

I am well aware of business cycles, btw. Thanks.

[Hydroshock]

I appreciate sensible, well thought out discussion.

[RockinRight]

Oil prices are dropping and interest rates are creeping back down. That will give the economy another shot in the arm.

[litehaus]

"This is probably factually correct."--------And, gasoline has dropped 10-12 percent lately---Sell your oil stocks!

Bush's fault!

[Centurion2000]

Investment bank HSBC has revised downward its forecast for 2007 economic growth and cautioned that the risk of an outright recession is growing as a retreat in housing threatens household balance sheets.

So just because the econmetric expectations of the US don't fit HSBC's rosy projected future we'er in danger of a recession? Please ....

[Always Right]

I am not 100% certain that consumers would reduce their spending if their home values fell.

It won't. The worst case will happen is consumers may have to use more expensive debt like credit cards to finance their spending. And that probably isn't the case though because Americans have still accumulated an enormous amount of equity in their homes and a small decline is not going to substantially change that.

[The South Texan]

"Oil prices are dropping and interest rates are creeping back down. That will give the economy another shot in the arm."

That's exactly right. I don't know why there is so much doom and gloom about the housing market. By historical standards, a 7% or 8% 15 year or 30 year mortgage is still pretty darn low. Back in 1996 when we bought our first home we financed at 7.75% and everyone was telling us we got a heck of a deal. BTW that was during the glory of the Clinton years.

[AFPhys]

"That could cause economic growth to slow to 2% by the second half of 2005 from 4% now, he predicts in a report called The U.S. Housing Bubble."

Get them with their own words. A perfect retort. Thanks.

[skeeter]

In my area, house prices have not driopped one bit. I wish like hell they would, I'm planniing on buying soon.

Same in the bay area, but then no one is buying, either.

Its weird, prices shot up over the past year & a half for no apparent reason, and now owners are holding out for top dollar and taking their homes off the market rather than drop the price.