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US economy dragged down by housing market

The US economy registered a growth fall in the Q1, dragged down by the sluggish housing market, it was reported Tuesday.

Though the economy is not actually in recession, „it is certainly close,” the Los Angeles Times said, quoting forecasters at the University of California in Los Angeles (UCLA). The nation's economy grew by a sickly 0.6% in the first three months of the year, the smallest increase in four years and a sharp decline from the Q4 of 2006, according to the UCLA Anderson Forecast which is closely watched because it predicted the 2001 recession before others. The paper said UCLA economists don't think economic growth will slip for a second straight quarter, which would signify a recession, but they predict that the economy will stay in a funk till next year as falling home values and rising gas prices put a crimp on consumer spending.

„We suspect that the weakness in the housing market is finally spilling over into consumption spending,” wrote senior economist David Shulman in the quarterly forecast. „Retail sales appeared to stall in April and automobile sales have become decidedly weak. This is not a recession, but it is certainly close,” Shulman said. (people.com.cn)