Sage Advice Quarterly Market Review 1Q2008

The economy is in for a rough slog during the first half of 2008. Whether it falls into an outright recession or slips to a point of near stagnation, there is no denying the powerful headwinds that will be restraining growth in coming months. The housing downdraft, of course, will continue to be the heaviest drag on activity, just as it has for the past eight quarters. Contrary to expectations a few months ago, the growth haircut from declining residential outlays is poised to deepen, not fade as the policymakers had thought when they forged their initial forecasts for 2008. With home sales still plummeting and soaring foreclosures adding to the mountain of unsold units, builders are retrenching at an accelerated pace.