IT SEEMS THAT the apocalypse has been postponed. Just a few weeks ago there was an emerging consensus that the American economy was doomed to below-trend growth in 2007 at best, and a recession at worst. The tale of woe went something like this:
The housing market is in a state of collapse. Never mind the figures suggesting that sales are recovering, or that the Federal Reserve Board’s analysts see signs of stabilization in the housing market–the data don’t reflect the large number of contracts that have been cancelled as speculators and prospective homeowners walk away from their deposits. Layoffs in the important construction industry are sure to follow. Worse still, with house prices dropping like stones, consumers will no longer be able to borrow against the rising value of their homes to finance trips to the malls. Wallets and purses will be zipped and the economy will stall.
