Economic predictions for 2008 are all over the map
December 25th, 2007 by sarahSource: International Herald Tribune ()
Some economists predict that the U.S. economy will slide into recession next year. Others expect the nation to avoid recession, if only barely. A few even think the economy will see solid growth. But for many middle- and lower-income families, the distinction will not matter.
Whether called a recession or not, the U.S. economy seems certain to slow in 2008, pushing unemployment higher and hundreds of thousands of people out of work. Surging energy costs, falling housing prices and tightening credit will punish consumers, most analysts agree, putting the brakes on spending and undermining the six-year expansion.
“We are in the danger zone,” said Nariman Behravesh, chief economist at Global Insight, a forecasting firm. “It wouldn't take very much to push the economy over the edge.”
The outlook is the gloomiest in years, particularly for the first half of 2008. Global Insight, for example, projects that the economy will barely grow at all in the first six months, expanding at an annual rate of just over 1 percent. Many economists expect the unemployment rate, now at 4.7 percent, to climb above 5 percent, with each tenth-point increase representing 150,000 jobless workers.
Additionally, the housing market's slide is expected to continue. Home sales could hit bottom by mid-2008, some economists predict, but prices will fall at least into early 2009. And oil prices should retreat from near-record levels but stay high, keeping the pressure on low- and moderate-income families.
Despite this, most economists expect the United States to skirt a recession - roughly defined as two consecutive quarters of negative economic growth. Keeping the economy afloat: employers and exports.
U.S. companies are expected to keep hiring next year as stronger global demand requires them to add to their work forces, still lean in the aftermath the 2001 recession. Hiring, however, will be cautious and at rates insufficient to keep the unemployment …