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Housing Slump May Bottom by Mid-Year: Bush Adviser

Reuters
Friday, 4 Jan 2008 | 11:21 AM ET

The drag on the U.S. economy from a deep housing slump should ease by mid-year, paving the
way for stronger economic growth, a top White House adviser told CNBC.

Jobs Jolt
The Bush administration's take on the jobs numbers, with Edward Lazear, Council of Economic Advisers chairman, and CNBC's Mark Haines

"The big drain on the economy for the past year and a half has been housing ... eventually that is going to bottom out and when that bottom outs, even if it doesn't expand, it will
remove that negative drag on the economy," White House Council Of Economic Advisers Chairman Edward Lazear said a live interview.

"Housing has been unfortunately a negative and that should stop probably in the next six months," he said.

Lazear said the soft U.S. jobs report released on Friday, which showed non-farm payrolls expanded by just 18,000 last month, was not all bad news.

"The numbers are low, but they're mixed," he said. "We had some good news in the sense that wages were strong. We saw continued wage growth that usually reflects a tight labor
market."

"It's just tougher to get high (jobs) growth when you're at the mature stage of a business cycle and that's where we are now. That doesn't mean that it's going to stop but it does mean
that job growth is going to be slower than we saw over the past few years or so," Lazear said.

Lazear said the Fed was looking at a "somewhat balanced economic picture" in terms of softer growth and higher inflation.

"I think the economy looks what I would say balanced -- balanced in the sense that the inflation numbers are a bit higher than they were in the past, but not high; the economic
numbers in terms of labor market, consumption, business investment are not as high as they were in the past, but not low," he said.

"I think that the Fed is looking at this as a somewhat balanced picture and that's been the reason for their policy over the past," he added.

Bush told Reuters on Thursday he was considering steps to give the economy a boost and Lazear said the president was always looking at his options.

In a separate interview on Bloomberg television, Lazear said the Bush administration was considering a variety of measures to stimulate the economy, but preferred options that
were "neutral" and not targeted to a specific sector.

"We are considering a variety of measures, we're not being complacent, we have pushed economic growth policies throughout this administration and we're not going to stop doing that
now," he said.

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