Although the Federal Reserve is reporting a slow in the economy (and blaming the housing and building sectors), they don’t see the slowdown as a downright threat of an economic collapse. 

"Many real-estate contacts expect housing markets to remain subdued for several months," the Fed said. "At firms without direct ties to real estate and construction, contacts are still wary that credit tightening and slowing construction might slow activity in their industry, but there is cautious optimism because few see much evidence of such spillovers at this time."

And I agree with them, though I am in the real estate industry.  When I worked for the state’s chief financial officers in a previous life (no, not like Shirley Maclaine), I used to get panicky when the stock market dropped or other economic indicators swooned.  however, we live in a nation that’s pretty darn diverse when it comes to our economy.  There’s also tourism, agriculture, retail, technology, manufacturing dollars, and strong unemployment rates that will continue to prop us.  People are still spending, but hopefully doing it more sensibly.  It is true that with age, you become wiser, Grasshopper. 

But back to housing – let’s say home sales are down 25%.  It sounds really bad, but remember the media tends to focus on the negative, so they aren’t reporting that 75% of home sales still exist.  The market is going back to basics, adjusting itself so that only qualified buyers can buy.  Making sure that when people buy, they can put some money down so they won’t just walk away if they miss a couple of months worth of mortgage payments.

Bill at the Businomics Blog chastises builders to some degree because they continue to build.  He has a cure for the builder blues:

The other strategy that bears consideration: lay off all staff.  Sell all houses you now have on the market at distress prices.  Develop a three-year plan to learn how to surf, or play the guitar, or fold paper into beautiful birds.  Then re-open your business in 2011.

My plan?  I’m going to win the Powerball!  Heh.

*Image from I-tulip.