Thread: Top economist says America could plunge into recession

Top economist says America could plunge into recession
December 31, 2007

Losses arising from America’s housing recession could triple over the next few years and they represent the greatest threat to growth in the United States, one of the world’s leading economists has told The Times.

Robert Shiller, Professor of Economics at Yale University, predicted that there was a very real possibility that the US would be plunged into a Japan-style slump, with house prices declining for years.

Professor Shiller, co-founder of the respected S&P Case/Shiller house-price index, said: “American real estate values have already lost around $1 trillion [£503 billion]. That could easily increase threefold over the next few years. This is a much bigger issue than sub-prime. We are talking trillions of dollars’ worth of losses.â€

Hmmm, ok...

Several points are required here -

For one, for poor and marginalized Americans, the 'recession' is not some vague prospect in the short to mid-term future, but is something these folks have faced daily for some time now. Actually, in a dark and ironic way, it's sort of good that not only the poorest Americans are impacted by a prospective downturn, at least some bankers and institutional investor will 'get' to take a hit too, and that's not a bad thing.

Two, with respect to housing prices/geography; well, the author did not point out that there still are areas of the country where prices still have not turned downward - I live in one of them. Yet, while housing prices continue to rise (for owners and renters alike), the number of family-sustaining jobs is actually decreasing, and on top of that, we are still a magnet area for 'outsiders' of all types (Americans from other states, legal immigrants, and yes, you guessed it, illegals largely from Central/South America, but also SE Asia, India, etc. too).
So, here we have more people vying for a smaller pool of available housing, and earning less money to cover those housing costs.

It's time for the government to get off it's collective butt, and start enforcing policies to help average ordinary American citizens and to say 'to heck with IAs and subsidizing banks and institutional investors.... (IMHO).