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%.