Q&A for the IEES website


Q. The immediate economic future seems somewhat uncertain. What can the current IEES forecast tell us about the “big picture?”

A. We believe that Federal Reserve Bank will continue to hold the current level of short term interest rates while the economy will continue to slowdown during the year. But we do not expect a recession.

Q. The housing market has obviously cooled off in Southern California. Are we heading for a crash?

A. The IEES forecast projected a decline of four to six percent in the median housing price for Orange County by year-end 2007. We expect a slow market (longer listing times and fewer sales) will be more typical of this adjustment than a substantial reduction in prices. However, there will be noticeable regional variations.

Q. Most people seem to have adjusted to higher gasoline prices over the past year without much change in driving behavior. What gives?

A. Gasoline is one of those products where we see very little short-term response to price changes, even fairly large ones. It takes time to switch to a more fuel efficient car, to change driving habits, or move closer to work. The adjustments typically come in terms of families spending less on something else, which is one reason economists are concerned about the impact of fuel price hikes on the economy.