by Calculated Risk on 5/01/2007 02:54:00 PM

From the Voice of San Diego: Report: Recession Unlikely But More Pain in Housing

Despite "storm clouds" of near-record foreclosure and default rates, weakness in the real estate market won't be enough to trigger a recession [according to economists at the University of California, Los Angeles Anderson Forecast].

On foreclosures:

The fact that foreclosures are spiking even though home prices haven't plummeted and the economy has remained relatively strong is historically unprecedented ... the fallout from mortgage defaults will prove a "major wild card" in the next two years.

On non-traditional loans:

... economists say they are looking to coming months to see the impacts of the popular exotic loans issued in 2004 and 2005. Most borrowers hoped to refinance or sell before their low introductory rates expired, but that prospect has dimmed with the slowdown.

"The reset crisis is really going to hit its peak early this summer," Ratcliff said. "Then we'll see how bad this is going to get."

And on jobs:

The impact of the real estate slowdown on jobs is just starting to be seen, the report says.

And the good news (He is talking about both San Diego and the entire nation here):

... without another job sector poised to take a nose-dive ... [the] forecast for the nation [is still] a "long runway for the soft landing" with no likelihood of a recession.

"It just doesn't look like there is an industry that looks like it's ripe for enough job losses to trigger a recession," Ratcliff said.

And a soft landing is still very possible. Even though, as Bloomberg reports, auto sales were terrible in April, the AP reports: U.S. Manufacturing Sector Expands at Faster-Than-Expected Rate in April. The mixed bag (away from housing) continues.