Dems in trouble: Recession not likely before 2021

Posted on: February 19, 2019 at 17:22:21 CT

Pelosi better get busy creating financial unrest

https://www.ocregister.com/2019/02/19/recession-not-likely-before-2021-housing-economists-say/

Good news America: The next recession may not appear in 2020, as a majority of economists long had forecast.

Instead, the next economic downturn could be delayed until 2021 or later, making the current session of economic growth — now almost a decade old — the longest in U.S. history by June. That’s the view of three housing economists speaking Tuesday at the annual convention of the National Association of Home Builders (NAHB) in Las Vegas.

If true, such economic news could be a boost to Republicans in the next presidential elections. Because the Federal Reserve plans to ease up interest rate hikes at least during the first half of this year, and because mortgage rates have decreased somewhat in the past month, the 2019 spring home buying season should be a good one for home sellers, the economists said.

“This expansion will come to an end,” said David Berson, chief economist for Nationwide Insurance. But, he added, “the odds of a downturn in the next year are pretty low.”

A key indicator of recession is when long-term bond rates fall below short-term rates for an extended period, generally leading to a recession 12 to 18 months later.

Such an “inversion” in interest rates has yet to occur.

Berson said the next recession probably won’t begin until late 2021 or 2022.

Frank Nothaft, chief economist for Irvine-based real estate data firm CoreLogic, said the risk of a possible recession likely will be high toward the end of 2020 and even higher in 2021 — after the next presidential inauguration.

Despite a sales slump in the last half of 2018, homebuying and prices won’t fall in 2019, the economists said.

After rising 2 percent in 2018, new home sales will increase about 3 percent in 2019, Nothaft predicted.

Although the pace of new home construction will remain well below historical averages, they nonetheless will continue to rise, added Bob Dietz, the NAHB’S chief economist.

After going up 3 percent in 2018, the NAHB predicts single-family home starts will increase 2 percent this year and an additional 4 percent to 928,000 detached houses in 2020.

With buildable land in short supply, builders increasingly are switching to townhomes. The number of townhomes built is projected to increase between 8 and 9 percent a year by 2020, Dietz said.

“This kind of home is selling,” he said.

Home builders nonetheless still face the same challenges facing them since the housing recovery started almost seven years ago: A shortage of construction workers and high costs of lumber and other building materials.

Many construction workers left the profession for good after home building all but stopped following the 2008 economic meltdown. Today, immigration constraints and a recluctance of young workers to work construction has failed to replenish aging workers who are retiring, the economists said.

“The slowdown in immigration and the weakness in recruiting young Americans to the construction sector has contributed to a labor shortage that persists and continues,” the NAHB’sDietz said. “Right now … we’re short more than 300,000 construction workers in the U.S.”

Meanwhile, home shoppers who have been waiting for prices to drop will continue to have problems affording the price of a new or existing home, the economists said.

“I think affordability is going to be the key issue (in how) housing advocates view the housing market in 2019,” Dietz said.