The following is an excerpt of the article, “Moody’s Forecast for Housing and the Economy: Dim” by Carrie Bay for DSNews:
The analysts at Moody’s Investors Service are downbeat in their outlook for both the U.S. economy and the housing market. In the agency’s ResiLandscape report issued last week, they warn that there’s a stronger chance the country will slide back into a recession, and they are forecasting a “longer and deeper housing correction.”
Mark Zandi, chief economist for Moody’s Analytics, said in the report, “We have lowered the near-term economic outlook and raised the risk of a double-dip recession from one in four to one in three.”
He says the U.S. recovery has lost significant momentum since the spring. Retailing, housing, business investment, and industrial activity have all weakened, and the job market is no longer improving. After ticking higher to 9.6 percent in August, Zandi is expecting the nation’s unemployment rate to drift back into double digits in the coming months.
“The recovery is sputtering,” according to Zandi, and the odds of a double-dip recession during the coming year have risen “uncomfortably high.”
On the housing side, Celia Chen, senior director for Moody’s Analytics says the market’s nascent recovery is already back-sliding into a double-dip.
“We have downgraded the near-term housing outlook based on the lingering weakness in the demand for homes, the expectation that job creation will remain soft this year, and the slow speed at which the mortgage industry is working through distressed mortgages,” Chen said in the report.
Chen expects house prices to fall until the third quarter of next year, significantly longer than Moody’s previous projections of a first-quarter 2011 bottom in home prices.
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