UCLA Anderson Forecast wrong?

So are we in a recession or not, either in California or the U.S.? The UCLA Anderson Forecast says no, but Christopher Thornberg, who used to write the same reports before departing to launch Beacon Economics, says the signs are obvious. The 'dismal science'? Not anymore!

First, from the San Francisco Chronicle:

"What we have in California is a recession. We have it right now," said Los Angeles economist Christopher Thornberg, a principal at Beacon Economics and a former UCLA Anderson Forecast staff member. "Jobs are falling. Taxable sales are falling. This is a recession."...

There simply aren't enough jobs in California building homes and making mortgages to create a recession without other areas of the economy crumbling too, UCLA analysts insist...

That position is based on the view that the spillover from housing will be limited. Other experts argue that ripple effects from housing will be profound, especially when they're combined with the clampdown on credit that is making loans harder to get for both consumers and businesses.

"UCLA seems to have the view that housing cannot sink the economy, and that's wrong," Thornberg said.

Next, from the San Diego Union-Tribune:

Thornberg, who founded Beacon Economics in Los Angeles after leaving UCLA, said that while he understands the forecast's rationale, he disagrees with the conclusion.

“They're right that this is unlike previous recessions. But so was the recession of 2001. That doesn't mean it didn't happen,” Thornberg said. “This one's going to be pretty nasty and definitely worse than 2001. That was really half a recession. It only affected the business side of the economy and not consumers. But consumers aren't being left out of this one.”

Thornberg said the economy is backing into a recession. In a typical recession, he said, huge layoffs put a crimp on spending that affects things such as housing prices.

This time, he said, the collapse of housing and the tightening of credit have led to spending cutbacks that lead to job losses...

From the Sacramento Bee:

The fact that the U.S. recession hasn't begun yet means nothing, said former Anderson forecaster Chris Thornberg, now a private consultant. It takes time for the housing market to cause a recession, he told an audience in Sacramento last week.

"A housing bubble is like a slow-moving train wreck," Thornberg said at a meeting of the Appraisal Institute's Sacramento Sierra Chapter. Thornberg, the head of Beacon Economics in Los Angeles, said California is already in a recession; the nation is heading into one.

Among the signs of a possible recession: a drop in national payroll jobs of 63,000 last month and continuing declines in the stock market. Sacramento-area unemployment, at 6.4 percent, is the highest it's been in 11 years. Statewide unemployment is 5.9 percent, or nearly one percentage point higher than a year ago.