US Economy Will Grow at the Slowest Pace in 5 Years in 2007

National Association for Business Economics survey of 47 top forecasters predicted that the overall US economy will grow by 2.7% this year, the slowest annual increase in the gross domestic product since a 1.6% rise in 2002, on a greater restraint from a  worse-than-expected slump in housing market.

In 2006, the GDP rose by 3.4%. NABE's November forecast put GDP growth this year at 2.5%.

Other Highlights:

  • Housing construction will plunge by 14.9% this year, nearly three times bigger than the 5.5% fall in residential construction they had projected in the earlier survey. Construction spending dropped by 4.2% for all of 2006. 
  • Consumer spending to grow by 3.2%in 2007, the same as last year. 
  • Consumer prices will rise by just 1.9% this year, down from the 3.2% increase on an annual basis last year. 
  • GDP growth to rebound to 3% in 2008 as housing stabilizes.
  • The unemployment rate will tick up modestly to 4.7% this year and 4.8% in 2008. The rate averaged 4.6% last year, the lowest in six years.
  • The Fed will be content to remain on hold for the entire year. 

"The forecast we are presenting is the picture of a soft landing," said Carl Tannenbaum, NABE's president and the chief economist at LaSalle Bank/ABN AMRO in Chicago.

Related/Sources:

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