As a reflection of what seems apparent on a local level, the White House on Wednesday lowered its forecast for economic growth this year.
Under the administration's new forecast, gross domestic product, or GDP, will grow by 2.3 percent as measured from the fourth quarter of last year to the fourth quarter of this year. That's down from a previous projection of 2.9 percent.
The main reason for the downgrade: The first three months of 2007 got off to an extremely weak start. Economic growth at that time had skidded to nearly a halt, increasing at a rate of just 0.6 percent, the worst showing in more than four years.
Federal Reserve Chairman Ben Bernanke, the administration and private economists expect the economy will rebound in the months ahead. The one wild card, though, is whether the nearly year-long housing slump -- which has been a damper on overall economic activity -- gets worse. "So it is just not quite clear where we are in terms of the housing market, whether it has bottomed out," Edward Lazear, chairman of the White House's Council of Economic Advisers told reporters.
The economy grew by 3.1 percent in 2006. The persistence of the housing slump is a factor behind the economy's projected loss of momentum this year.
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