by Calculated Risk on 9/12/2007 02:18:00 AM

From the LA Times: Economy will hover near recession, forecast says

The nation's economy will be so sluggish well into next year that any major hiccup could tip it into recession, UCLA's latest economic forecast predicts.

The end of easy credit and a further decline in home construction are sending the economy into a "near-recession," with growth hovering at just above 1% through the first three months of 2008, according to the UCLA Anderson Forecast to be released today.

The forecast presents a gloomier outlook for jobs and the housing market. The nation's unemployment rate will rise to 5.2% by mid-2008, up from the current 4.6%.

And the forecast for housing starts is grim:

The group sees [housing starts] bottoming out at 1 million units annually, down from the previous forecast of about 1.2 million.

Home construction is seen as "barely recovering" to 1.4 million units annually by the end of 2009. By comparison, housing starts peaked with more than 2 million units annually in 2005.

This is below both my forecast (1.1 million units) and the forecast of Goldman Sachs (1.1 million units).

And this is interesting:

Even the sales of office supplies -- viewed by some as an indicator of where the economy is headed -- are off, according to Pasadena-based Avery Dennison Corp.

"Short-term economic conditions are challenging," Avery's chief financial officer, Daniel R. O'Bryant, told analysts this week.