Location: New York
Author: RiskCenter Staff
Date: Thursday, February 21, 2008
A U.S. recession is highly unlikely and the housing crisis is almost over, according to a report released yesterday by The Conference Board, a New York, N.Y.-based research group.
Despite a weakened economy, corporate profits are still rising. Consumer spending has slowed from its growth at about four percent in mid-2005, but is still continuing at a rate of two percent to 2.5 percent a year.
The annual rate of export growth is about 13 percent and total wage and salary growth is approximately five percent.
The report suggests that the housing market correction is almost over. Even at current activity levels, housing will likely subtract about 0.4 percentage points from 2008 growth. The study predicts interest rate cuts and home price declines will improve housing affordability.
However, a big loss was seen in the financial sector. Basic earnings data show that financial services profits fell from about $10 per share in the second quarter of 2007 to a loss of almost $2 in the fourth quarter. Top global financial institutions disclosed roughly $125 to $150 billion in asset write-downs.
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