_Sorry, I am recovering from a bout of the flu so my posts have been a light and behind schedule for the past few days._

A friend of mine who is an economist told me an old joke about economists once. It goes something like this:

>If a group of economists are gathered together in a room, not only are they unable to agree on where the economy is headed, they can’t agree on where it came from.

Thus the dilemma of readers trying to figure out what the consensus of the usual economists quoted by the media actually is.

There has been a smattering of silver lining in some of the economic news lately, starting the the Fed’s release of the [Beige Book on November 29th](http://www.federalreserve.gov/Fomc/BeigeBook/2006/20061129/default.htm), an anecdotal description of the nation’s economy. The [outlook for the economy doesn’t appear to be as bad [MW]](http://www.marketwatch.com/news/story/feds-beige-book-finds-improving/story.aspx?guid=%7B2585C645-D783-4364-85C3-1A7A39E8D684%7D) as once thought. That doesn’t mean rosy though.

Even the more pessimistic economists seem to speak in terms of a soft landing without a recession next year. This is exemplified by the usually negative but very credible [UCLA Anderson Forecast [LA Times]](http://www.latimes.com/business/la-fi-uclaecon7dec07,1,4564562.story?coll=la-mininav-business) which concluded in their recent report that the [housing market weakness won’t cause a recession [CPN]](http://www.cpnonline.com/cpn/specialties/article_display.jsp?vnu_content_id=1003494273).

Some economists say the [Fed tightened the belt too far (which I agree) [Reuters]](http://today.reuters.com/news/articlenews.aspx?type=reutersEdge&storyID=2006-11-30T173915Z_01_N30387440_RTRUKOC_0_US-USA-ECONOMY-RATES.xml&src=113006_1422_INVESTING_comment_n_analysis).

Of course, [economic pundits have been saying the Fed has it all wrong [SA]](http://usmarket.seekingalpha.com/article/22147). Somehow I doubt the Fed has it all wrong, even though I agree that they pushed rates 1-2 increases too high as it relates to housing. In my real estate-centric world, I know the Fed has other fish to fry, even though housing is so important to the big economic picture.

On Friday, [a group of all well-known economists/pundits were all gathered in a room [Smartmoney]](http://www.smartmoney.com/bn/ON/index.cfm?story=ON-20061211-000262-0745) (remember the joke?) and perhaps gave some clue as to what they were thinking. The event was brought together by Senator Paul Sarbanes of Maryland who has a gloomy view of the housing market. Senator Chris Dodd, D-Conn. who will be the next chairman of the powerful Senate Banking Committee said he wanted to crack down on predatory lending. The responses of the panel ranged from soft to hard landing.

* Christian Weller, senior economist for the Center for American Progress, a left leaning think tank said:

>We have to shift away from the housing-boom driven economy to something else,” Weller said. “The only something else we can think of and would hope for is an investment boom, and unfortunately so far that hasn’t really happened.

* Mark Zandi, chief economist for Moody’s Economy.com (My favorite) said:

>”The housing bubble is correcting in an orderly way,” though home prices are down more in some locations than others, Zandi said. Retail sales ahead of the end-of-year holidays are “solid,” and that suggests “very, very limited” spillover to the larger economy from weaker real estate, he said.

* Dean Baker, co-director of the Center for Economic and Policy Research who is nearly always pessimistic on the housing market lamented that:

>I think the Fed could and should have done something about the housing bubble.

>To address housing market bubbles, the Fed and other authorities should first try public communication and tighter lending regulations, but the central bank shouldn’t rule out raising interest rates “if need be,” Baker said.

[The Federal Funds futures market](http://www.clevelandfed.org/Research/policy/fedfunds/index.cfm) seems to generally agree with the semi-optomistic of many economists in seeing no move by the Fed in January and a solid position of more of the same in March. However, its going to get interesting in June 2007. Its anticipated that the Fed will have to cut rates by then as conditions erode. Thats not much of a help to many housing markets because with weaker economies, there will be less interest in real estate as people are concerned about their own job outlook.

However, in local markets with relatively strong economies like New York City and others, it stands to reason that these markets could benefit from rate reductions more than most. The national rate decrease would be prompted by conditions not found in the local economy so it wouldn’t be the double edged sword that some markets find themselves in.