UCLA Anderson Forecast sees significant economic slowdown but no recession

“In its first quarterly report of 2007, the UCLA Anderson Forecast remains steadfast in its belief that the national economy does not face recession, though the group’s economists concede that length of the current, below trend growth period leaves them “increasingly nervous.” The Forecast in particular notes that, “ … the credit crunch in the subprime mortgage market will likely trigger a second leg down in the housing market in terms of output and prices.” The Forecast asserts that the slowed economy may well endure longer than previously expected, but that better-than-expected consumption, a “less-negative” trade sector and at least two and possibly three rate cuts will keep Gross Domestic Product (GDP) positive throughout 2007. In California – and in spite of some positive news in the form of revised employment revisions – the UCLA Anderson Forecast looks for a “significant slowing of the California economy in 2007, as the double-whammy from construction and mortgage finance creates drag on the rest of the (state’s) economy.” “