Bubble blogs and pessimists love to say that the housing downturn will lead to a recession. No employment collapse caused by the housing market according to ASU.

“The figures received through the first half of 2007 reflect a surprisingly mild response by Arizona labor markets to the deflating housing bubble,” writes McPheters. “Unemployment in Arizona is below the national average and the economy is still adding jobs.”

A combination of factors is at work, he explains. Non-residential construction, including public, office, retail and industrial building, is “surging,” according to McPheters, making up for the slow residential sector. Overall, he writes, construction is down less than 2 percent.

It’s been over 2 years since home sales peaked and over 1 year since home prices peaked.

Now, the GDP numbers released yesterday were surprisingly good.

If there is to be a recession, it will be at least a year away and by then the hardest part of the real estate market correction will be over.

If there is to be a recession in a year or two, it won’t be caused by the real estate market, although, a slow real estate market may contribute to it.

At this point, however, I do not see a recession, just a slow down.