Archive for December 2006
The Wall Street Journal
WASHINGTON — New home construction is plummeting. Car sales are weakening. Investors have driven long-term interest rates well below the short-term rates set by the Federal Reserve. All these factors are present today, and all have been precursors of past recessions.
But the U.S. central bank and much of Wall Street are now betting that the old rules don’t apply, and that a recession next year, while possible, is unlikely.
“This time will be different,” Ed Leamer, who heads the forecasting center at the University of California at Los Angeles’s Anderson School of Management, predicts in a report. “This time the problems in housing will stay in housing.” It’s a prediction, he admits, that “keeps us up at night.” Read the rest of this entry »