The White House raised its US economic growth forecast for 2007 today but lowered its projection for next year as trouble in the housing and credit markets along with high energy prices take their toll.
In its twice-yearly forecast, which will be incorporated in the Bush administration's fiscal 2009 budget proposal due early next year, the White House said it now expects 2007 real gross domestic product growth of 2.7 per cent, up from its June forecast for 2.3 per cent.
For 2008, it also expects real GDP growth of 2.7 per cent, which compares with its earlier outlook for 3.1 per cent growth.
The White House said it now expects 2007 real gross domestic product growth of 2.7 per cent, up from its June forecast for 2.3 per cent
"While the difficulties in housing and credit markets and the effects of high energy prices will extract a penalty from growth, the US economy has many strengths and I expect the expansion to continue," US Treasury Secretary Henry Paulson said in a statement.
Private economists have been ratcheting down their economic growth forecasts in recent months as the slumping housing market and ensuing credit crunch threaten to slow consumer and business spending.
The White House acknowledged that rising food and energy prices have pushed up inflation, and raised its 2007 consumer price index forecast to 3.9 per cent from 3.2 per cent.
However, the administration expects inflation to cool next year. For 2008, they estimated CPI at 2.1 per cent, down from their prior forecast of 2.5 per cent.