Jan. 31, 2020
Two years ago, 67% of economists surveyed by Wall Street Journal for the Economic Forecasting Survey predicted that we would experience a recession no later than the end of 2020. The same study conducted 3 months ago revealed that more than one third of the economists still saw an economic slowdown right around the corner.
The news created some concern among consumers whereas 53% of home purchasers (first-time and repeat) currently believe that a recession will occur by the end of the year while 57% believed that the next recession will be as bad or worse than 2008.
Wait!! Experts are changing their minds.
The Wall Street Journal revealed earlier this month (January 2020) that only 14.3% of those economists now believe we're in danger of a recession to occur this year. The article strongly stated, "The U.S. expansion, now in its 11th year, will continue through the 2020 presidential election with a healthy labor market backing it up."
Since we are experiencing 11 years of economic expansion, the longest stretch ever in American History, there is reason to believe that a recession could occur in the-not-too distant future. And it makes sense that the buyers / sellers remember the travesty of 2008 when they hear the word "recession". Ali Wolf, Director of Economic Research said in a recent interview: "With people having PTSD from the last time, they're still afraid of buying at the wrong time."
What is different about the housing market today than in 2008. First, we have a shortage of homes rather than an abundance. Secondly, rather than choosing risky, adjustable-rate mortgages, homebuyers are taking out 30-year fixed-rate and predictable mortgages. The housing market is simply in a much better position today then a decade ago.
Optimism regarding the Wall Street Journal's article was repeated by others as well. CNBC, quoting Goldman Sachs economists:
"Just months after almost everyone on Wall Street worried that a recession was just around the corner, Goldman Sachs said a downturn is unlikely over the next several years. In fact, the firm's economists stopped just shot of saying that the U.S. Economy is recession-proof."
The Washington Post stated: "The U.S. economy is heading into 2020 at a pace of steady, sustained growth after a series of interest rate cuts and the apparent resolution of two trade-related threats mostly eliminated the risk of recession."
Robert A Dye, Chief Economist At Comerica Bank stated: "I expect that the U.S. economy will avoid a recession in 2020."
So there you have it and it is our hope that we've been able to provide some clarity on the "expert's" economic outlook.