WASHINGTON -- The latest Housing Starts report, showing a dropof 10% for the month in the building of new homes has raised thered flag of recession. The annual level is now 1.19 million,compared to a 1.33 million rate in August, down nearly 31% from ayear-ago, making it the worst in 14 years.

CNNMoney.com quoted CUNA's Chief Economist Bill Hampel, whoposited that housing problems raise the chance of an economicrecession to 40% as the overall economy is dragged farther down bythe slumping housing market.

"What I had always thought is that we would have a long, flatbottom for the housing market, but it is now apparent that thecontraction is sharper than that," he said. "It raises the chanceit [the slowdown in housing] will have an impact outside of thehousing market."

Hampel predicted that The Fed would likely have to react bycutting rates at its Oct. 31 meeting. The stronger than expectedjobs report in September isn't enough to put confidence back intothe system without another cut from the Fed, which cited thehousing slowdown when it announced its first rate cut in four yearslast September.