With each New Year comes the usual array of pundits who forecast the future course of economic activity. What do we make of the soothsayers’ predictions this year? Perhaps this is the most uncertain time in recent economic history. The year finished with a reasonably robust equity market and a Fed seemingly poised to “rescue” the economy from the jaws of the “credit crunch.” At the same time many forecasters pointed to storm clouds such as looming trade and domestic deficits, a beleaguered consumer, buffeted by high gas prices and skidding household equity, and the continuing threat of adverse geo-political shocks. So what do we make of all of this?

To date I have been riding the optimistic wagon, suggesting that the national economy would avoid recession -- perhaps by a just a whisker. It is time to face the music. Wall Street has begun the year with a thud, the December jobs report is abysmal with the unemployment rate actually popping to 5 percent, and the real estate sector seems poised for another leg down on housing prices. There is still reason to hope that the downturn will be relatively short lived and that the latter half of 2008 will bring modest economic growth, but for now the economy has stalled. Is this a recession? Well if it walks like a duck and quacks like a duck, why not call it a duck? The NBER will probably make the official call in a few months. Let’s go with a recession that began in October 2007 and ends in late spring, with a little sign of life in real estate come mid summer. I said little, not anywhere near a return to boom times of 2005. All of this presumes that we don’t get caught watching too much election coverage this summer and forget to shop -- in which case the slowdown could linger. Here’s wishing you a prosperous new year! Now hunker down for the next 9-12 months!!