Mark Zandi: Recession to end September 2009
In a speech to Utah business leaders, Mark Zandi, chief economist and co-founder of Moody’s Economy.com, said he expects the U.S. recession to end Sept. 15, 2009. Although he said 2009 would be “painful” and 2010 would be “uncomfortable,” he ended his speech with some reasons for optimism. First, the U.S. is paying a lot less for energy, and even though we have probably seen the low in regard to energy prices, he said he doesn’t expect prices to rise significantly in the near term.
Zandi's second reason for optimism is the fact that housing is becoming much more affordable. Nationally, he expects home prices to bottom in the third quarter; however, in the Salt Lake area, he expects prices to continue to fall. The problem in Salt Lake is that both the house price-to-income and house price-to-rent ratios are still above their historical norms. In other areas around the state, however, Zandi’s analysis pointed to more correctly valued prices. “In fact, in markets where you do see affordability, prices are stabilizing,” Zandi said.
Finally, Zandi is optimistic because he expects help from the federal government. The proposed fiscal stimulus and foreclosure mitigation programs along with aggressive efforts from the Federal Reserve should bring the U.S. out of recession. “We’re going to get out of this mess, and we’re going to get out of it by next year,” he said.
See Zandi’s presentation on the Salt Lake Chamber’s Web site.