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Thursday, December 17, 2009

Feldstein: House Prices to Fall Further

by Calculated Risk on 12/17/2009 03:44:00 PM

From Bloomberg: Harvard’s Feldstein Says U.S. Economy Still Mired in Recession

Restrained consumer spending suggests “2010 is going to be a very weak year,” said [Harvard University economics professor and former NBER president Martin Feldstein ] “Thrift in the long run is a very good thing, but increasing thrift as you come out of a recession is going to be a drag."
Regarding the residential property market ... Feldstein said the Obama administration’s effort to revive the housing market is a failure and home prices will continue to decline.

“It was just not well enough designed,” Feldstein said. “They ended up failing.” That suggests the housing slump will “continue to push down house prices,” he said.

“We saw a little pause in home-price declines in the summer but I think that was because of the first-time home buyers program,” Feldstein said. “We’re not going to get that boost.”
On the recession comments - "The recession isn’t over" - I think he was just referring to the dating of the recession, although he clearly thinks there is a chance of a double dip recession and he expressed concern about is the "danger is we will run out of steam".