UCLA on recession risk: “Don’t worry, be happy”

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As promised, I gave the UCLA Anderson Forecast a quick read for better understanding of why the Wizards of Westwood don’t see a recession.

In brief, it’s an analysis you’ve heard before: There won’t be a recession because the housing downturn is ‘mostly confined to housing.’ Construction employment is weak, but the labor market is not collapsing. We’ll muddle through, the economy stalling but barely avoiding recession.

In housing, the forecast sees jingle mail as a noteworthy trend that reinforces the belief that the job market is OK: ‘This time people are walking away from their homes not because they lost their jobs, got divorced or had health problems, but only because declining home prices have turned their net worth in the house negative, a financial burden to carry into the future or turn over to the lender, whichever they desire. Many have chosen to walk way.’

Unfortunately for those hungry for data on the ‘walking away’ trend (is it real or anecdotal?), the report doesn’t attempt to quantify the extent of jingle mail.

The headline quote really is in the report, part of Ed Leamer’s breezy conclusion: ‘The data don’t yet add up to a recession, and there is nothing here to challenge the basic story of sluggishness that we have had for two years. Don’t worry, be happy. You have to avoid recession depression.’

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Photo Credit: US Presswire