OTTAWA, April 24 /CNW Telbec/ - Tumbling home prices in some regions of
the United States continue to take a bite out of consumer spending, limiting
U.S. economic growth to a below-potential 2.4 per cent this year, according to
The Conference Board of Canada's U.S. Outlook - Spring 2007.
"The housing market downturn is in full swing, and there are many
indications that it is far from over," said Kip Beckman, Principal Research
Associate. "The situation in U.S. housing markets may not stabilize for
another six months."
Housing starts are forecast to drop by more than 10 per cent for the
second consecutive year. More and more households are also encountering
difficulties in making their mortgage payments. Weak housing markets are a
drag on consumer spending growth in several ways. In addition to lower
spending for home-related purchases and a declining number of construction
jobs, declining prices are estimated to remove another US$1 trillion from
overall household wealth this year.
Despite the struggles in housing markets, real household spending is
still forecast to grow by 2.7 per cent in 2007. These gains will come from
employment growth in the service sector of the economy, along with solid wage
gains-particularly in the financial industry and leisure/hospitality, which
are relatively immune to overseas competition.
Two factors will enable the U.S. to stay out of recession in 2007. Export
growth is solid, thanks to a weaker U.S. dollar and stronger performance in
overseas markets. In addition, business spending on equipment will remain
For further information:
For further information: Brent Dowdall, Media Relations, (613) 526-3090
ext. 448, firstname.lastname@example.org, www.conferenceboard.ca