Thursday, November 29, 2007

White House economic forecast more optimistic than others

The White House issued an economic forecast Thursday that called for "solid growth" through next year, a prediction more optimistic than that of the Federal Reserve and far more optimistic than those of many analysts on Wall Street.

The administration predicted that the U.S. economy would expand by 2.7 percent in 2008, that unemployment would remain below 5 percent and that the outlook would be even better in 2009.

By contrast, Fed officials are predicting "subpar" growth through next year, starting with a sharp slowdown over the next six months. The "central tendency" of forecasts by Fed policy makers is for growth to slow to between 1.8 percent and 2.5 percent next year.

The White House was closer to the central bank on its estimate about unemployment, predicting that it would average 4.9 percent next year - up only slightly from 4.7 percent. But many analysts think the central bank's unemployment forecast is itself too optimistic, because it is inconsistent with its forecast for slower growth.

The White House forecast came after government data issued Thursday showed that U.S. home prices had marked a quarterly decline for the first time in 13 years. Home prices slipped 0.4 percent nationwide in the July-September period, compared with the previous quarter, the Office of Federal Housing Enterprise Oversight said.

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