"We do expect a soft landing, however, the yellow caution flagis up and we need to keep a close eye on the indicators," he says."In fact, the Fed may have to cut interest rates to avoid a hardlanding."

Higher energy prices and increased volatility in the stockmarket, with major corrections in technology stocks, have raisedconcerns, Lereah says. Further slowing is evident with easingindicators, such as durable goods, consumer confidence and carsales. Even with stock losses in 2000, most people remain in goodshape because of a tremendous building of wealth during the lastfive years.

Housing continues to be one of the most stable sectors of theeconomy. According to NAR figures, existing home sales will be off4% this year. Next year's sales should be fairly stable, declining1.1%, Lereah says. NAR expects a resale volume of 4.99 millionsales this year, with 4.94 million forecast for 2001. New-homesales are expected to slip only 1.7% this year to 892,000 units,with 2001 projected at 861,000 units, a decline of 3.4% from thisyear. Housing starts are forecast to decline 4.8% percent to atotal of 1.59 million units this year, then slip 3.8% to 1.53million in 2001.