Too soon to predict another recession, expert claims

Another economic recession would be devastating to the housing market, but one expert says it's still too early to say if it will happen.

Another economic recession would be devastating to the housing market, but one expert says it's still too early to say if it will happen.

Improvement in the U.S. economy slowed in past months, but this doesn't mean that recent gains will be reversed, according to Capital Economics senior economist Paul Dales. Specifically, the unemployment rate has hovered at 8.2 percent since May while consumer confidence has also lost momentum. 

However, there are other uncertainties that could weigh heavily on the nation's economy and real estate industry as well as the financial safety and soundness consumer have to purchase homes.

"Providing that a break-up of the euro is fairly orderly and that Congress prevents the U.S. from falling off a fiscal cliff, the U.S. is unlikely to drop back into recession," Dales said. "That said, the risks to our long-held forecast that GDP will grow by just 2 percent this year have shifted to the downside."

Meanwhile, weak indicators during the second quarter, don't mean the third quarter will follow suit, Dales added. If serious declines are experienced in the near future, this could prompt members of the Federal Open Market Committee to call for more economic stimulus to avoid another catastrophic event.



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