CNBC Press Releases

DYLAN: LET'S MOVE ON TO, A LONG LIST, STARTING WITH HOUSING, DR. HUBBARD. HAVE THE DATA OUT THIS MORNING. IT WAS NOT ENCOURAGING. 8% DECLINE FROM AUGUST IN EXISTING HOME SALES 19% KLINE FROM THE PRIOR YEAR. DO YOU HAVE ANY INDICATIONS WHERE WE ARE IN OUR HOUSING MARKET IN THIS COUNTRY RIGHT NOW?

HUBBARD: THERE IS NO QUESTION THAT HOUSING IS THE AREA THAT WE'RE MOST CONCERNED ABOUT. THERE IS SIGNIFICANT SOFTNESS IN HOUSING AND TO BE PERFECTLY FRANK I THINK AS BOTH HANK PAULSON AND BEN BERNANKE HAVE SAID, IT'S NOT GOING TO TURN AROUND QUICKLY. THE GOOD NEWS IS THE REST OF THE ECONOMY IS QUITE STRONG. OUR UNEMPLOYMENT RATE REMAINS VERY, VERY LOW AT 4.7%. WE CONTINUE TO INCREASE JOBS EVERY MONTH. 49 STRAIGHT MONTHS WHICH IS A RECORD FOR THIS COUNTRY OF JOB EXPANSION. AND EXPORTS ARE THE, YOU KNOW, THE GREAT NEWS. EXPORTS ARE UP 12% YEAR-OVER-YEAR. WHILE IMPORTS ARE ONLY UP 2 OR 3%. SO, WE CONTINUE TO FEEL POSITIVE ABOUT THE ECONOMY AND OBVIOUSLY WE'RE CONCERNED ABOUT HOUSING.

DYLAN: BUT I MEAN AS YOU GUYS KNOW, WE HAVE, WE TALK ABOUT THESE THINGS LIKE THEY'RE ALL SEPARATE AND THEY'RE NOT. WE HAVE CREATED A FINANCING STRUCTURE TO PURCHASE HOMES. SOME OF THOSE HOMES WERE, HAVE BEEN DEFAULTED ON. AS A RESULT THE FINANCING STRUCTURE HAS BEEN A PROBLEM. MERRILL LYNCH THIS MORNING TAKING NEARLY $8 BILLION WRITE-DOWN. THE U.S. STOCK MARKET LAST I CHECKED IS DOWN 100 SOME AT POINTS AS RESULT OF THIS TIRE CHAIN. HOW CONFIDENT ARE YOU ALL WE CAN ENDURE THE DECLINE IN HOUSING AND HAVE IT NOT ULTIMATELY TIP THE U.S. ECONOMY INTO RECESSION?

LAZEAR: EFFECT PEOPLE POINT TO IS EFFECT OF HOUSING WEALTH ON CONSUMPTION. THAT IS THE OBVIOUS THING PEOPLE ARE CONCERNED ABOUT. THERE IS NO DOUBT HIS TORE THERE HAS BEEN EFFECT OF DECLINE IN HOUSING PRICES ON CONSUMPTION. WE HAVEN'T SEEN MUCH OF THAT YET. THE CONSUMPTION NUMBERS LOOK LIKE THEY WILL BE PRETTY GOOD. THIRD QUARTER LOOKS ACTUALLY PRETTY STRONG THERE. I THINK IN LARGE PART THE REASON FOR THAT THIS HOUSING DECLINE THAT WE'RE SEEING RIGHT NOW FOLLOWED A VERY SIGNIFICANT DEPPRECIATION IN HOUSING PRICES. SO MOST PEOPLE STILL HAVE A GOOD BIT OF WEALTH IN THEIR HOUSES. A LOT OF EQUITY IN MOST HOMES. AND, AS A RESULT, I DON'T THINK THAT WE'RE GOING TO SEE QUITE THE SAME KIND OF REBOUND IN CONSUMPTION WE MAY HAVE SEEN GIVEN OTHER HOUSING PRICE DECLINES.

GUTIERREZ: THAT'S A GOOD POINT. WE SAW IN THE SECOND QUARTER A BIG HIT ON HOUSING BUT THEN WE SAW THE IMPACT, AND ALSO, A VERY LOW QUARTER FROM STANDPOINT OF CONSUMPTION. CONSUMER PURCHASES.

DYLAN: WHAT DO YOU MEAN A VERY LOW QUARTER?

GUTIERREZ: THE SECOND, THE -- SECOND QUARTER CONSUMER IMPACT ON THE ECONOMY CONTRIBUTION TO GROWTH WAS VERY LOW. IN SPITE OF THAT, WE GREW 3.8%. WHY? BECAUSE EXPORTS WERE UP. BECAUSE NONREST CONSTRUCTION WAS UP. THE ECONOMY WAS ABLE TO OFFSET THAT DECLINE IN OTHER PARTS. WHAT WE'RE SEEING IN THE THIRD QUARTER IS STRONGER CONSUMER PURCHASES, CONSUMER SPENDING THAN WE HAD IN THE SECOND QUARTER AND --.

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