The softening housing market in the United States will cause 'problematic conditions in the national economy through 2007', according to the latest annual report by the University of California's Anderson Forecast.
Economists at the renowned forecasting centre laid out a scenario of domino effects that could lead to a 'fragile economy'. But their scenario stops short of an outright recession, because 'the manufacturing sector is virtually on the floor and there is hardly any room to fall further'.
The report, 'No recession any time soon, but troubles ahead, nonetheless', predicts a loss of 200,000 jobs in the construction sector of California's state economy alone, a disheartening perspective for the economy because construction has contributed almost a quarter of all new payroll jobs in California in the past two years.
Another 500,000 'informal jobs', such as realtors and mortgage brokers that were created during the boom since 2000, would also start to dry up, the report said.
UCLA Anderson senior economist Christopher Thornberg said the housing slowdown 'definitely will have an impact on the health of the economy'.
'The California forecast mirrors that of the nation,' the institution said.
