GO
Loading...

Is U.S. Economy Headed for Hard or Soft Landing?

With inflation slightly above the target range for the Federal Reserve and the initial first quarter GDP reading at only 1.3%, two policymakers debated on "Morning Call" whether the economy is headed for a "hard" or "soft" landing.

Hugh Moore of Guerite Advisors said the economy is headed toward a hard landing "primarily because the housing correction is only about two-thirds of the way down."

He added that housing takes about 27 months to correct itself and may lead to negative GDP.

But Mike Englund of Action Economics said that if housing declines begin to diminish, then the Fed will have increased confidence about the economy.

Nevertheless, Moore expects a recession in late '07 or early '08 due to weak retail, weak housing, and weak capital expenditures, which are all declining, he said.