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2008 Avoiding a Downturn
U.S. economy to skirt a recession in 2008
OTTAWA - Continued growth in exports and investment spending will keep the U.S. economy out of a recession, according to the Conference Board's U.S. Outlook - Winter 2008.
"While we are not forecasting a recession, U.S. growth will remain below
potential for most of 2008, and the unemployment rate will increase to more
than five per cent," said Kip Beckman, Principal Research Associate. "U.S.
real gross domestic product is expected to expand by only 2.1 per cent in
2008."
While consumer spending grew at a solid pace throughout most of 2007-due
mainly to increased real disposable income-declining home prices, higher
energy prices, and high debt levels will limit spending growth this year. Real
household spending is expected to grow by just 1.4 per cent in 2008.
Recent business confidence surveys suggest that while most businesses are
concerned and hiring less aggressively, they are not yet laying off workers,
except in the housing and manufacturing sectors. It will be important to watch
employment figures closely over the next few months, as a sudden and
unexpected drop in employment would sharply increase the chances of a
recession in 2008.
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