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 DEC. 08, 2006
Lower Interest Rates Predicted in 2007
A UCLA Anderson Forecast reported December 7 that the U.S. economy is showing signs of weakening, therefore setting the stage for lower interest rates to be seen in 2007.

As a result of a weak housing market, the forecast predicts that the real gross domestic product will increase no greater than 2.7% in 2007.


Mr. Edward Leamer, director of the UCLA Anderson Forecast, stated that a result of this slow growth, the Federal Reserve will drop the interest rate in order to stimulate the economy. Mr. Leamer predicts that there could be interest rates as low as 4.5% by 4th quarter 2007.

The forecast also predicts that housing starts will fall to an annual rate of 1.4 million by the 2nd quarter of 2007. Furthermore, they see the prices of new homes falling 10% in the 3rd quarter of 2007 due to the large inventories that builders currently have on hand available for sale.

The housing market will also see a drop in price of existing homes. The forecast sees these changes hurting some bankers, real estate professionals, construction workers and home builders; however not severe enough as to cause a recession.

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