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No. 1 threat: Credit crunch, not terrorism

Janet Babin Aug 27, 2007

TEXT OF STORY

Scott Jagow: You know things are bad with the economy when mortgage lending is a bigger concern than a terrorist attack, but that’s what a new survey says. Marketplace’s Janet Babin reports from North Carolina Public Radio.


Janet Babin: The National Association for Business Economics surveyed about 258 of its members. They’re some of the top economists in the country.

For the first time worries about a credit crunch and defaults on mortgage loans supplanted terrorism as the biggest short-term threat to the economy.

Defense concerns had been No. 1 since last year.

Economist Mark Zandi with Moody’s Economy.com agrees that’s not the biggest concern right now. He says all this unpaid debt means there’s a lot less credit around for economic expansion.

Mark Zandi: That means housing is going to be even weaker than it’s been, and now the risk is that it will infect consumer spending and the broader economy, the job market, so it feels like it’s spreading out.

Zandi says the odds of recession are as high as they’ve been since the last U.S. recession, from March through November of 2001.

I’m Janet Babin for Marketplace.

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