The Economy in 2008
The U.S. economy was buffeted by rising oil prices and the subprime mortgage crisis in 2007. The impact of these factors was felt in the broader economy-undermining, to a degree, both business investment and consumer confidence. Their combined impact will stretch into 2008, slowing economic growth.
The Chamber sees growth averaging about 2% in the first half of the year, an improvement over a weak fourth quarter of 2007. Growth should increase to 2.5% in the second half, as the housing sector bottoms out. Job growth will continue, albeit at a relatively slow pace-with the unemployment rate rising slightly above 5%.
There is a risk of a recession--but the Chamber considers a modestly growing economy the more likely outcome in 2008.
Consumer spending will remain steady. Corporate profits should improve as 2008 progresses. Business investment will pick up modestly by the middle of the year. Export growth will continue to brighten the overall economic picture. Inflation will be in the moderate range, making further interest rate reductions less likely as the year progresses.
Given the volatility of global financial and energy markets, along with uncertainties in politics and policy, there is a risk of a recession-but the Chamber considers a modestly growing economy the more likely outcome in 2008.
Americans should hold their current and future leaders accountable for exercising tax and fiscal discipline.
Weaker growth, plus the reality that we live in a global economy, makes it imperative that policymakers carefully consider the economic impact of any expansion of taxes, regulations, or government programs. There is already a big bill coming due in federal and state entitlement programs. Should the proposed tax increases under discussion in Washington and in the states become law, a tipping point could be reached that drives our economy into a recession. Americans should hold their current and future leaders accountable for exercising tax and fiscal discipline. The U.S. economy must have breathing room to regain its strength and full potential.
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