White House cuts economic growth forecast

Council of Economic Advisers says GDP to slow for remainder of year and in 2007, blaming weakness on housing.


NEW YORK (CNNMoney.com) -- The U.S. economy should experience slower growth than originally anticipated for the remainder of the year and in 2007, the White House said Tuesday.

The President's Council of Economic Advisers projected that economic growth would be slower than forecasted last June, with real gross domestic product growing 3.1 percent for all of 2006 and 2.9 percent in 2007 before rebounding to a 3.1 percent gain in 2008.

The forecast said that the revisions reflect a weakening in the housing sector, but that other areas of the economy remain strong.

"The economic forecast clearly reflects the fact that the U.S. economy is moderating to more sustainable growth levels, firmer labor markets and steady inflation rates," Treasury Secretary Henry Paulson said in accompanying remarks.

On Monday, the Census Bureau reported that new housing starts slipped nearly 15 percent in October to their lowest level in over six years, while a reading on builder's confidence hit a nine-year low.

The government forecast, which will be used for the President's fiscal year 2008 budget, projects that the unemployment rate will be 4.6 percent during 2006 and 2007 and that employers would add an average of 129,000 jobs per month.

Last month, the unemployment rate slipped to 4.4 percent, hitting its lowest level in five years, according to the Labor Department, while employers added 92,000 jobs.

Click