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Conflicting views of the economy increase

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Goldman Sachs (NYSE: GS) says that the odds of a recession in the U.S. have moved from 30% to a range of 40% to 45%. But economists at the investment bank "now expect the U.S. Federal Open Market Committee to cut interest rates to 3% by mid-2008, down from its earlier forecast of 4%," according to MarketWatch.

Over at the U.S. Conference of Mayors things look a little different. They commissioned a study by Global Insight Inc., which suggested that the value of U.S. housing will fall $1.2 trillion next year, and that foreclosures could hit 1.4 million. But "Global Insight predicted that the economy would grow at a 1.9% rate in 2008," writes The Wall Street Journal. The firm even expects modest job growth.

Between the two opinions there appears to be little beyond smoke and confusion. As the year wears on and the stock market falls, the number of views about the 2008 economy grows, with little consensus.

That leaves investors to ponder the most important factor in most of the studies. Will housing problems sink the rest of the economy, or can the damage be isolated to those consumers who have problems directly related to their homes?

No one can answer that. No matter who issues them, the opinions are only a guess.

Douglas A. McIntyre is an editor at 247wallst.com.

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NASDAQ-37.612,138.44
S&P 500-19.141,091.49

Last updated: November 28, 2009: 09:08 AM

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