Continued Drops in Home Sales and Prices Provoke Concern Over a Possible Deep Recession

Every day brings more negative economic news. Today's news that sales of existing houses fell 2% in March, while the median price of a house tumbled 7.7% on the heels of an 8.2% decline in February, provoked further concern that a prospective recession may be quite deep.

In New Haven, Yale University economist Robert Shiller, cautioned that the slump in the housing marketing could cause prices to fall more than they did during the Great Depression of the 1930s, according to a report from the Associated Press. Shiller said that bailouts will be needed to prevent millions of people from losing their homes.

According to the AP, Shiller, a pioneer of the widely-watched S&P/Case-Shiller home price index, said that there's a good chance that housing prices will fall further than the 30% drop that took place during the Depression. Home prices already have fallen 15% since their peak in 2006, he noted.

"Basically, we're in uncharted territory. It seems we have developed a speculative culture about housing that never existed on a national basis before," he told the AP.

Meanwhile, gasoline prices rose above $3.50 a gallon on average for the first time across the country, the AAA said on Monday, as fears about energy suplies and a falling dollar drove prices to new records, The New York Times reported. The report said that gasoline prices have risen by 22% in the past year, and some analysts expect prices close to $4 a gallon, on average, this summer, when demand is at a peak.

When added to the problems being faced by a broad array of financial institutions, it's clear that the economy is likely to decline significantly from here.