After such a strong performance by the markets in 2006, investors are wondering if next year will hold much of the same. But there are concerns that a continuing decline in housing and the weakening U.S. dollar could lead to a recession. Gary Shilling is one such pessimist. He was on “Morning Call” saying there’s a 75% chance the economy will dip in 2007.
According to Shilling, there’s always a lag of about a year to a year and a half between falling home sales and price declines. Sellers attached to their homes fail to see the reality of the market. Expect prices to “go off the cliff” in the next six months, “and that will really hurt the economy,” he says.