The U.S. economy is in a recession and commercial real estate will not be immune, according to speakers at the Pension Real Estate Association’s spring conference in Boston. At the convention’s opening session, Nariman Behravesh, chief economist and executive vice president for economic research firm Global Insight, declared that “we are in a recession” considering that “all data are flashing red.”

On the positive side, he expects that it will be a recession from mild to medium severity. Behravesh projects that total worldwide losses from the U.S. subprime mortgage crisis will reach about $400 billion, of which about $250 billion has already been realized.

Behravesh expects the impact from the government’s fiscal stimulus package to have an impact in the second half of the year, which will lead to positive growth going forward. However, there could be a resumption of the recessionary conditions next year, once the impact of the stimulus wears away, which could lead to a “double dip” recession.

He sees a 25% chance of this sort of situation and expects that it will be the end of 2009 before the U.S. economy is out of the woods. In terms of the commercial real estate fallout, Behravesh points to signs of contraction in nonresidential construction. One concern is that corporations are becoming risk averse and not willing to invest in additional commercial real estate. However, Behravesh sees more of a downturn than a “big bust.”

Larry Summers, former U.S. Treasury Secretary and professor of economics at Harvard University, also believes that the economy is likely to get worse before it gets better. Credit spreads are pricing in recessionary conditions.

Rebecca Jarvis, a CNBC reporter and moderator of the session, wondered if the Federal Reserve’s actions are right in the current market. Wesley Edens, chairman and CEO of Fortress Investment Group, maintains that the Federal Reserve took the right steps in a market, which lacks of liquidity and in which the number one cause of concern is a high level of leverage. Edens sees the current economy as having a “very substantial impact on real estate from a fundamental standpoint.”

Behravesh noted that the Fed faces a dilemma of not knowing how bad it will get. While new financial instruments have helped diversify risk, it is also not clear where the risk has ended up. Summers noted that the government has set in motion a train of events for the Federal Home Loan Bank system and the government-sponsored enterprises to between them buy up to $300 billion in mortgage-backed securities. The concern is not that the government will run out of ammunition but that “the history of government efforts to prop up speculative prices is not a happy one [since] people know that the bid is coming from an artificial source.”