(WASHINGTON) The White House predicted on Monday that the economy would escape a recession and that unemployment would remain low this year, though it acknowledged that growth had already slowed.
‘I don’t think we are in a recession right now, and we are not forecasting a recession,’ said Edward Lazear, chairman of the White House Council of Economic Advisers.
Presenting the White House’s annual report to Congress on the economy, Mr Lazear acknowledged that the plunge in housing and mortgage markets had yet to hit bottom and that growth would be low in the first half of 2008.
But administration officials are counting on a lift this summer from the US$168 billion economic stimulus package that Congress passed last week and from the Federal Reserve’s recent decisions to reduce shortterm interest rates.
The administration’s forecast calls for the economy to expand 2.7 per cent this year and for unemployment to remain at 4.9 per cent. That is much more optimistic than predictions by many analysts on Wall Street.
Among economists surveyed by the Blue Chip Economic Forecast, a closely watched monthly survey, the consensus prediction is that the economy will expand 1.7 per cent.
Indeed, many analysts contend the US has already slipped into a recession and will get only a temporary lift from the stimulus package.
The report on Monday predicts that business investment growth and job growth are both likely to remain ‘solid’ in 2008.
Source: NYT (Business Times 13 Feb 08)