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Housing falls alone

A "For Sale" sign hangs in front of a home in Naples, Fla., a city that a March 2006 survey declared the most overvalued housing market in the US.

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SCOTT JAGOW: The latest forecast from the National Association for Business Economics comes out today. Here's the gist: The housing market may be collapsing, but it probably won't take the whole economy down with it. More now from John Dimsdale.


JOHN DIMSDALE: Housing's decline will bottom out by next summer. Inflation will slow down and oil prices will drop. And the economy will grow a relatively healthy 2.5 to 3 percent in 2007.

That's this morning's forecast from a panel of 50 business economists.

One of them, John Silvia with Wachovia Bank, figures cheaper gasoline will be good news for December's holiday shopping.

JOHN SILVIA: It appears as if the decline in oil prices over the last month or two has been accompanied by a rise in consumer confidence.

The silver lining in the housing slowdown is that the slower economy will bring inflation under control, so Silvia expects the Federal Reserve will hold steady on short-term interest rates for a while.

The consensus of the panel of business economists is that interest rates will begin to come down in the second half of 2007.

In Washington, I'm John Dimsdale for Marketplace.

About the author

As head of Marketplace’s Washington, D.C. bureau, John Dimsdale provides insightful commentary on the intersection of government and money for the entire Marketplace portfolio.

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