by Calculated Risk on 6/03/2006 08:54:00 AM

From Lisa Girion at the LA Times: Weak Job Growth Raises Concerns

UCLA Anderson Forecast Director Edward Leamer said all the speculation about what the central bank and its new chairman, Ben S. Bernanke, should do about rates was folly because of a real estate slowdown that was well underway.

"I don't think the Fed, at this point, has much control," Leamer said.

"We have a sick sector, the housing sector, and there's not a whole lot of medicine the Fed can provide."

Leamer's group sees declining home sales contributing to a broad economic slowdown that bottoms out at 2% growth and stays there for at least a couple of years.

"It's been a drunken party for several years," he said. "Now, we have to deal with the hangover."

A few more comments on the economy from the article:

"The slowdown is in place," wrote John Silvia, an economist at Wachovia Corp. "How much and how rapid remains an issue."

"There is now a growing body of evidence — especially among leading indicators — that a meaningful economic slowdown is underway and this will finally cause the Fed to hold" its benchmark short-term rate at 5%, said Bernard Baumohl, executive director of Economic Outlook Group.

"The economy is slowing fast," said Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd.