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Economic Dependence On Housing: Getting It Wrong vs. Saying It Wrong

Its getting harder and harder to see the road

Boston Federal Reserve President Cathy Minehan [MW] [1] said that if housing prices fall [FR] [2], the impact could be more serious on the economy than generally believed.

Since this speech was held in from the of New England Realtors Conference Monday, I thought it was especially interesting that MarketWatch omitted the presence and comments of David Lereah, the Chief Economist for NAR. His comments were, as expected, far more optimistic [Boston.com] [3].

“The solid fundamentals in our economy will keep the real estate expansion alive,” Lereah told about 250 real estate agents at the New England Realtors Conference.

Real estate expansion?

Perhaps thats why MarketWatch ommitted him from the article when covering this event. He has maintained this expansion argument since early fall. It strikes me as very self-serving. See Fill In The Blank With The Latest Catchphrase: Housing “Expansion” [Matrix] [4].

With all that being said, its going to get interesting in the second half of 2006. Consumer confidence is waning [Conference Board] [5].

The decline, which follows four months of gains, suggested to some analysts that the nation’s economic growth will slow in the year’s second half [Times-Dispatch] [6]. The Conference Board said its Index of Leading Economic Indicators fell 0.2 percent in February, after a revised 0.5 percent rise in January. The January increase had initially been reported at 1.1 percent.

The irony here, is that if the economy weakens (bit not too much) in the second half of 2006 or first half of 2007, mortgage rates could trend downward and actually provide a boost to the housing market.

What name do we give that?