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

Wednesday, 30 May 2007 | 11:36 AM ET

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.

Hard vs. Soft Landing
Debating whether Fed Chairman Ben Bernanke will get his soft landing or whether the economy will take a hard fall, with Hugh Moore, Guerite Advisors partner; Mike Englund, Action Economics principal director and chief economist and CNBC's Michelle Caruso Cabrera

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.