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Economist predicts housing downturn
An economist who has long predicted this decade's housing market bubble would deflate said the residential real estate downturn could spiral into "the most severe since the Great Depression" and could lead to a recession.
Yale University economist Robert Shiller's comments came a day after the Federal Reserve responded to credit market turmoil by slashing the target federal funds rate by a half point to 4.75 percent.
Shiller, in testimony prepared for a hearing of the Joint Economic Committee said the loss of a boom mentality among the public "may bring on a further loss of consumer confidence." While he sees a "significant risk" of a recession within the next year, Shiller said actions by the Fed will lessen its severity.
Also in prepared remarks, Peter Orszag, director of the Congressional Budget Office, gave a more tempered forecast, saying that financial market turmoil and weakened consumer confidence "could pose serious economic risks" that are difficult to predict.
An economist who has long predicted this decade's housing market bubble would deflate said the residential real estate downturn could spiral into "the most severe since the Great Depression" and could lead to a recession.
Yale University economist Robert Shiller's comments came a day after the Federal Reserve responded to credit market turmoil by slashing the target federal funds rate by a half point to 4.75 percent.
Shiller, in testimony prepared for a hearing of the Joint Economic Committee said the loss of a boom mentality among the public "may bring on a further loss of consumer confidence." While he sees a "significant risk" of a recession within the next year, Shiller said actions by the Fed will lessen its severity.
Also in prepared remarks, Peter Orszag, director of the Congressional Budget Office, gave a more tempered forecast, saying that financial market turmoil and weakened consumer confidence "could pose serious economic risks" that are difficult to predict.
