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Fannie puts chance of another recession at 50-50

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The economics and mortgage market think tank within Fannie Mae estimates a 50% chance the country will slide back into a recession by the end of the year. On the bright side, there is an equal chance the economic recovery will continue unabated, according to the group's October 2011 Economic Outlook. “Home prices are a key factor for any positive movement in the housing market, and the large inventory of distressed homes working their way through the market is putting downward pressure on prices," said Fannie Mae Chief Economist Doug Duncan. "Now that we are entering a traditionally weak seasonal sales period, we expect home prices to show renewed declines after firming for several months," Duncan added. Other dragging factors outside of housing include the Greek debt crises spreading to other economies in Europe. Closer to home, fiscal austerity measures including the scheduled expiration of various tax cuts and unemployment benefits will likely dampen monetary spirits. Continuing financial reform is also stifling business growth. The estimations are largely in line with other predictions. Moody's Analytics Chief Economist Mark Zandi said in September there is a 40% chance the economy will slide back into recession within the next year. He listed the same reasons as Fannie for drawing his conclusion. Write to Jacob Gaffney. Follow him on Twitter @jacobgaffney.

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