Newswise - Despite a slumping housing market, rising oil prices, flat auto sales, a weak U.S. dollar and waning consumer confidence, America's economy will not slip into recession, say University of Michigan economists.
"There is enough resilience in the economy to keep output expanding," said Saul Hymans, U-M professor emeritus of economics. "The Federal Reserve's recent action to contain the credit crisis stemming from problems in the subprime mortgage market appears to be averting the development of a system-wide credit crunch, and lower interest rates are lending support to economic activity."
In their annual forecast of the U.S. economy, Hymans and colleagues Joan Crary and Janet Wolfe say, however, that national economic output growth (as measured by real Gross Domestic Product) will remain sluggish in the short term---due to the ongoing decline in residential construction and subdued growth in consumer spending.
They say the rate of economic growth will be just 2.1 percent this year, down from 2.9 percent in 2006. But output growth will increase to 2.4 percent next year and accelerate to 3.4 percent in 2009.
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