Bush Administration Lowers Growth Estimate

[Jun 30, 2007.]

The White House is not as optimistic as it used to be when it comes to the issue of economic growth.

In the first week of June, the Administration lowered its expectations for economic growth for 2007. In the latest scenario, the nation's gross domestic product or GDP is expected to rise by 2.3 percent from the fourth quarter of 2006 to the fourth quarter of 2007. Previously, the Bush team had predicted growth of 2.9 percent.

Why the change in perspective? Observers say that the main reason for the lowered economic expectations is the less-than-stellar economic news for the first three months of the year. Economic growth was plodding along at a mere 0.6 percent—the absolute worst rate in more than four years.

Still, Administration officials, a number of economists, and fed officials are predicting an economic rebound soon. Still unclear, however, is whether the current housing slump is likely to continue.

Edward Lazear, chair of the White House Council of Economic Advisers, has said, "So it is just not quite clear where we are in terms of the housing market, whether it has bottomed out."

In 2006, the economy grew 3.1 percent. The Administration expects a similar growth rate in 2008 and 2009, which would be encouraging news for investors.

The gross domestic product, which is considered the best diagnostic tool for determining a country's economic health, assesses the value of goods and services produced in the U.S.

Meanwhile, forecasts about unemployment appear to be encouraging. Forecasters predict the jobless rate will drop to 4.5 percent this year. That's slightly better than the previous prediction of 4.6 percent. However, unemployment is expected to rise to 4.6 percent in 2008, and even higher, to 4.8 percent, in 2009. Despite the national economic slowdown, the employment outlook has been fairly bright in the U.S. in recent months.

Julie Ann Amos
June 30th 2007