RECESSION talk in the media used to color John Pfister's economic forecasts, he says. No longer. The economist with Chicago Title & Trust Company has replaced his prediction of a mild recession to one of slow growth. With interest rates on 30-year fixed mortgages now below 10 percent, consumer confidence is the only thing holding back the residential real estate market, Mr. Pfister says.
In the classic recession, he says, ``you have an overheated economy, which we haven't had since before the 1980-82 recession. You have a run-up in interest rates, which we certainly don't have, and you have long, lengthy inflation. The only inflation we've had is in oil prices. And even that's baloney because there is no supply problem as there was in either the '73 recession or the '80 recession.''
Other than consumer confidence, the only real problem in the economy is credit supply. Banks, he says, ``have been whipsawed by the regulators. The banks are building liquidity. They're not loaning much. Well, how long can they build liquidity? That doesn't go on forever.''