How far down will housing drag us?
TEXT OF STORY
Doug Krizner: Investors were troubled by more signs of weakness for the economy. Marketplace’s Steve Tripoli has that story.
Steve Tripoli: Layoffs surged in the financial sector, pending home sales fell by 12 percent — economists had expected a 2 percent drop, and a major economic group said housing’s a worse-than-expected drag on the economy.
The subprime crisis and housing woes are feeding on each other, says Wachovia Bank economic analyst Adam York.
Adam York: Subprime worries were what arguably sparked this last credit crisis. And the credit crisis in and of itself is creating problems for the housing market.
Now a wider spillover effect appears to be materializing, but York isn’t pushing any panic buttons yet.
York: We don’t think it’s a doomsday scenario, we’re not looking for a recession in the U.S. economy at this point. But we would certainly say that we think the impact is larger than we thought it would be a month ago.
York says tomorrow’s employment report will be the next big indicator of how far housing and subprime misery is spreading.
I’m Steve Tripoli for Marketplace.
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