Recession on the horizon – how will the housing market fair?

Lindsey Piega, chief economist for Stifel Nicolaus & Co, came to a similar conclusion, telling Bloomberg that a recession is “all but inevitable” and that the real question lies in what the depth and length of this downturn is going to be.

The answer to this is largely in the hands of the Federal Reserve, which has remained committed to driving inflation down by rising interest rates.

“The Fed is not going to pause until they see that inflation has convincingly come down,” said Anna Wong, Bloomberg’s chief US economist. “That means that this Fed will be hiking well into economic weakness, likely prolonging the duration of the recession.”

Fed chair Jerome Powell has said that the economy remains in “strong shape” to withstand interest rate hikes and avoid a recession, but these comments have done little to halt concerns of what’s to come. Luckily, experts believe that a recession in our current economic landscape won’t be as brutal as the downturns of the early 80s or the financial crisis of 2007-2009.

According to noted academic economist Robert Gordon, the Fed’s current mission requires only “about half the amount of disinflation” that was needed in the 1980s. Additionally, consumers, banks, and the housing market are all in a better position today than they were in the period leading up to the 2007-2009 financial crisis.