WH Pares 2008 Economic Forecast, Hikes Jobless Rate

The White House cut back its expectations for 2008 economic growth today and said unemployment rates are likely to worsen, citing the housing slump. GDP will grow only by 2.7% next year, down from an earlier 3.1%, said officials from Treasury and the Council of Economic Advisers; and the jobless rate is expected to hit 4.9%, worse than the previous forecast of 4.7%.

“The housing market decline has been more significant than we expected,” said a top adviser. The unemployment rate would still be considered low, the AP cautions, as last year's 4.6% was a six-year low. Inflation was a bright spot in the new report, as consumer prices are now expected to rise only 2.1% in 2008, down from 2.5%. (More GDP stories.)