The drag on the U.S. economy from a deep housing slump should ease by mid-year, paving the way for stronger economic growth, a top White House adviser told CNBC.
"The big drain on the economy for the past year and a half has been housing ... eventually that is going to bottom out and when that bottom outs, even if it doesn't expand, it will remove that negative drag on the economy," White House Council Of Economic Advisers Chairman Edward Lazear said a live interview.
"Housing has been unfortunately a negative and that should stop probably in the next six months," he said.
Lazear said the soft U.S. jobs report released on Friday, which showed non-farm payrolls expanded by just 18,000 last month, was not all bad news.
"The numbers are low, but they're mixed," he said. "We had some good news in the sense that wages were strong. We saw continued wage growth that usually reflects a tight labor market."
The only comment I can say on Lazear's prediction that the housing slump will end in six months is this:
What Lazear is not telling you is that this six-month prediction is a political prediction--six months will bring us into the mid-year of this 2008 presidential election. This is really Bush Happy-Talk--words that will keep the American people ignorant enough of the recession that is now hitting us, until after the 2008 elections, when President Bush can dump this entire economic mess to his successor, and blame the successor for Bush's failed presidency.
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