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Michael Bazdarich, a senior economist for the Anderson Forecast, warned of a decline in the housi

The housing bubble is bound to pop, creating a sharp decline in real estate costs that could trigger a recession, several economists at the UCLA Anderson Forecast said.

The business school issued its quarterly economic forecast Wednesday, an evaluation considered by many to be one of the leading independent economic forecasts in the nation.

The event took place at the Korn Convocation Hall in the UCLA Anderson School of Management.

Though economists have warned of an imminent crash in the housing market for months, real estate prices have remained steady.

But Michael Bazdarich, a senior UCLA Anderson Forecast economist, said “housing activity is at an unsustainable level right now.”

The housing boom, which Bazdarich called “the beast that wouldn’t die,” has befuddled economists during the last two years, declining then rebounding three separate times.

“This is a market that shows a lot of ups and downs, a lot of short-term volatility,” Bazdarich said.

Though eight of the last 10 recessions since World War II have been prompted by crashes in the housing market, Forecast Director Edward Leamer said a recession caused by a burst in the housing market is unlikely.

Economists at the Forecast also discussed the future of California’s economy, which economist Ryan Ratcliff predicted would be sluggish next year, with little overall growth.

As one of the state’s strongest sectors, construction will likely take a 2 percent loss in jobs.

“Construction has been a major source of growth in 2005,” Ratcliff said. “Construction sort of blows everyone else away.”

Other job sectors would not likely suffer a drop in the next year, Ratcliff said.

Ethan Harris, managing director and chief U.S. economist at investment bank Lehman Brothers, shared what he called a “Wall Street perspective” on the year’s economic developments.

He said American consumers have been spending at an unsustainable rate and will likely soon shift from the current attitude of spending to one of saving.

Tax cuts, 0-percent car loans and a booming housing market have created “the caffeinated consumer,” Harris said.

Panelists also discussed the future of the Federal Reserve, which will soon be under new leadership after longtime Chairman Alan Greenspan steps down.

Economic adviser Ben Bernake is poised to replace Greenspan, whose 18-year career has been highly praised.

Harris said he expected “a return to democracy” at the Federal Reserve after Greenspan’s “benevolent dictatorship” comes to an end.

Throughout his tenure at the helm of the Federal Reserve, Greenspan has been known to govern his agency more authoritatively than past chairs.

Some experts say his almost legendary legacy of shrewd management at the Federal Reserve will be hard to live up to.

“A financial crisis hits, and he waves his magic wand and the market comes back,” Harris said.

Until Bernake successfully fields his first financial crisis, Wall Street’s respect for the Federal Reserve will be low, Harris said.