Magazine article Mortgage Banking

David Wyss, Standard & Poor's Chief Economist

Magazine article Mortgage Banking

David Wyss, Standard & Poor's Chief Economist

Article excerpt

It's a safe bet that even the most passive observer of the financial markets knows David Wyss. As New York-based Standard & Poor's (S & P's) chief economist, Wyss is responsible for S & P's economic forecasts and publications. He also coauthors the monthly Equity Insight and the weekly Financial Notes.

Wyss joined Data Resources Inc. (DRI), Lexington, Massachusetts, in 1979 as an economist in the European Economic Service in London, which was acquired by The McGraw-Hill Companies, New York. He came back to the United States in 1983 as chief financial economist for DRI/McGraw-Hill, became chief economist for Standard & Poor's DRI in 1992, and chief economist for Standard & Poor's in 1999.


Before joining DRI, Wyss was a senior staff economist with the President's Council of Economic Advisers during the Jimmy Carter administration, senior economist at the Federal Reserve Board and an economic adviser to the Bank of England.

Wyss holds a bachelor of science degree from the Massachusetts Institute of Technology (MIT) and a doctorate in economics from Harvard University--both in Cambridge, Massachusetts.

Wyss is on the board of the National Association for Business Economics, Washington, D.C.

Mortgage Banking recently interviewed Wyss about the outlook for the housing market in 2007, and other economic trends.

Q: Regarding the 2007 outlook: Many forecasters have been calling for a "soft" landing for the overall economy. Can you talk about whether or not you are in the soft-landing camp while summarizing your outlook for the overall economy and for the housing market?

A: We expect the economy to slow down, mainly because of the problems in the housing market. Overall there's still enough strength in the economy to prevent this from turning into a recession. So we're expecting a slowdown to around 2.3 percent growth in 2007 from the roughly 3.3 percent [in 2006].

Q: Do you see the Federal Open Market Committee [FOMC] holding its target for the Federal Funds Rate at 5 1/4 percent for the foreseeable future, or is there more tightening or loosening in store in 2007? What would prompt the Fed to further tweak monetary policy?

A: Well, "foreseeable future" is sort of this month [December]--so I expect it to hold solid for that. Once you get beyond December, though, I think there probably will be a loosening around midyear. It depends on how soft the economy becomes. [S & P's economic forecast is] a little bit weaker than the consensus estimate for economic growth.

As a result, I expect the Fed to lower rates somewhere around midyear. We're looking for three quarter-point declines by the end of the year [2007]--so, getting down to 41/2 percent from the current 5 1/4 percent.

Q: During its most recent boom, the housing market had been credited as being the engine of economic recovery following the last recession in an environment of record-low interest rates. Do you see this most recent housing boom that helped fuel economic growth as an anomaly? Are we seeing a return of housing to a more traditional economic role?

A: Well, the housing market is slowing down. We are seeing a cycle in the housing market. We haven't seen one since the early 1990s, so it's a bit of a shock to the people in the system.

But we still think that the housing industry is less cyclical than it used to be. We're not going back to what we were seeing in the 1960s and 1970s. Changes in financing, changes in the structure of the industry--all suggest that things are going to be less cyclical.

Now, we are still looking at a 25 percent drop in housing starts between 2005 and 2007. That's big, but it's not as big as the 50 percent declines you've gotten in most past cycles.

Q: So without the record ultra-low interest rates that housing enjoyed during the last boom, could such a growth-producing housing boom happen again? …

Search by... Author
Show... All Results Primary Sources Peer-reviewed


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.