SAN JOSE, Calif., Jan. 24 /PRNewswire-FirstCall/ -- Economists advised "cautious optimism" for 2008 at Comerica Bank's annual Economic Forecast Conference today in Santa Clara, Calif.
(Logo: http://www.newscom.com/cgi-bin/prnh/20010807/CMALOGO )
"The odds of a recession are now approaching 50 percent," Dana Johnson, Comerica Bank senior economist, told about 500 business leaders at the Santa Clara Convention Center. "We see a red hot trading sector and a frigidly cold housing sector, and in the middle are the consumers -- and consumer actions will determine whether we have a recession or a simply a slow-down."
Stanford University economist Peter Blair Henry told the Comerica Bank conference audience that a continuing expansion of the world economy will "cushion" a U.S. economic slowdown.
Johnson agreed: "The economy is in for a bumpy rather than a hard landing."
"We've never looked at a credit crunch like this," Johnson said. He predicted the impact of the tightening of credit on the U.S. economy will be "hurtful but not devastating."
Johnson said that anticipated additional cuts by the Federal Reserve in the federal funds rate of at least another 0.25 percent "will have a very important stimulus effect on the economy." The Federal Reserve's policy-making group, known as the Federal Open Market Committee, on Tuesday lowered its target for the federal funds rate, which regulates overnight loans between banks, to 3.5 percent, from 4.25 percent.
He also said that continued job growth will counteract some of the impact of the credit crunch. "Unemployment claims are still low and jobs are still increasing, so there is a nice underlying increase in real incomes," Johnson said.
"The US economy is going to slow -- whether there is a recession or not is somewhat beside the point," said Henry, who is an economics adviser to presidential candidate Sen. Barack Obama. "However, the U.S. economy will slow less than it would have in previous years, because we are more integrated into the world economy."
For more of Dana Johnson's Economic Reports, go to http://www.comerica.com/ (Economic Insights, National & State Economic Briefs).
The 2008 Comerica Bank Economic Forecast Conference was presented by Comerica Bank and co-sponsored by the San Jose Mercury News and KCBS All News Radio.
About Comerica Bank
Comerica Bank is a subsidiary of Comerica Incorporated (NYSE: CMA), a financial services company headquartered in Dallas and strategically aligned into three major business segments: the Business Bank, the Retail Bank, and Wealth & Institutional Management. Comerica focuses on relationships and helping businesses and people be successful. Comerica bank locations can be found in Michigan, California, Texas, Florida and Arizona, with select businesses operating in several other states, Canada and Mexico. Comerica reported total assets of $62.3 billion at Dec. 31, 2007. For more information, go to http://www.comerica.com/.
Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20010807/CMALOGOSOURCE: Comerica Bank
CONTACT: Barry Holtzclaw of Comerica Bank, +1-408-556-5111,
+1-831-246-0648, bholtzclaw@comerica.com
Web site: http://www.comerica.com/
