What the Economists Are Saying

Kurt Karl, Swiss Re:

"The key to recovery is housing market. The Fed's latest actions to make housing purchases more affordable via lower mortgage rates is right on target. This will eventually put a floor on [mortgage-backed securities] and help banks assess the value of their assets. It will get the economy and the banking sector growing again."

Mickey Levy, Bank of America:

"We expect housing activity to decline through the first half of 2009, with a gradual pickup thereafter. However, home prices will likely fall throughout 2009, limiting the normalization in credit conditions during the year."

Mike Englund, Action Economics:

"The market may be underestimating the degree to which the housing cycle is mostly complete, and may form a bottom through Q1 of next year with potential for some volume measures to rise through 2009 even as prices still fall."

William Dunkelberg, National Federation of Independent Business:

"Starts will get back to normal later in 2009 except in Arizona, California, Florida, and Nevada, where prices and starts will remain depressed."

Stuart Hoffman, PNC Financial Services Group:

"Housing starts, sales, and prices are also likely to decline during the same time. As job losses and layoffs and house prices hit bottom near mid-year 2009, we expect lower interest rates and energy prices, a freer flow of credit to businesses and consumers, higher stock prices, and an improving sense of confidence in President Obama's handling of the economic crisis will all combine to slowly lift the U.S. economy out of recession in the latter half of 2009 followed by global economic recovery in 2010."

Keith Hembre, FAF Advisors (U.S. Bancorp):

"The consequences for future economic growth resulting from the overextension of credit and overinvestment in residential real estate in the earlier years of this decade may be cushioned by these economic policy responses, but ultimately the consequences of the patterns in credit and residential real estate investment growth in prior years cannot be avoided despite the perceived strength of the incoming Administration's economic team."