Fannie Mae economist David Berson concedes that the U.S. economy is in a recession but says it likely will be short and that the recovery, by the second half of 2002, should be strong.
Berson says his post-terrorist-attack forecast is based on four factors, including "near-historic" low levels of unsold housing inventory. Second is a high level of "monetary and fiscal stimulus already making its way through the system." Third, the impact of refinancing attributed to lower mortgage rates and lower energy costs should be a major boost. And fourth, the war seems to be playing out in a controlled fashion.
"This is all highly dependent upon what happens with the war on terrorism," Berson says. "Those are things we cannot easily predict. But we should see a strong recovery in the second half of 2002."
According to Berson, the third and fourth quarters of this year will evidence a downturn, but the first quarter next year should be flat, with rising numbers thereafter.
He is looking for 1.56 million housing starts for all of 2001, a drop of almost 6%. Single-family starts will amount to 1.22 million this year and 1.16 million in 2002.
The silver lining is the supply of unsold housing. It is tracking at 4.2 months. In past recessions it has exceeded eight months.
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