Housing Slump Dampens '08 Prospects

Economists cut projections for 2008 growth for a third consecutive month, Reuters reports, signaling the fallout from mortgage woes will be widespread and prolonged. A survey of 52 experts estimated the economy would expand 2.4% next year; they’d predicted 2.6% growth last month and 2.8% the month before. The number is still higher than the 2% gain forecast for 2007.

The economists expect consumer spending to have its smallest gain since 1991, as households faced with job and home uncertainty will grow more cautious about savings. The survey also predicted that home prices would post their first year-over-year decline since the 1930s; Reuters notes the numbers came in before a report showing employment beat expectations in August and September. (More subprime mortgages stories.)