Forecasters See Chance For Negative Quarters

A negative quarter of gross domestic product is possible as home prices are expected to fall before rebounding in 2010, according to a panel of professional forecasters surveyed by the Federal Reserve Bank of Philadelphia.

The forecasters see a 49.1% chance second-quarter GDP will be negative, with a 28.7% chance in the third quarter and a 29.9% chance in the year’s final three months, according to the survey.

In a special question on home prices, panelists were asked to project the change in home prices in three indexes. The forecasters see home prices on the Case-Shiller index falling 12.0% in 2008 and 0.3% in 2009 before posting a 3.8% increase in 2010. The Office of Federal Housing Enterprise Oversight U.S. total index will drop 4.6% this year and 1.0% in 2009, before rising 2.1%. And the OFHEO purchase only index is seen declining 5.4% this year and 0.1% next year and 2.6% in 2010.

The forecasters also cut projections for short-term GDP growth to 0.2% in this quarter, 1.7% in the third quarter, and 1.8% in the fourth quarter. Inflation projections were also pushed a tick higher.

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