WASHINGTON — Strained by an ailing housing market and credit woes, the economy in 2007 is expected to log its worst growth in five years and should be somewhat sluggish next year.
The No. 1 risk, though, is that the economy will lose its footing altogether and fall into a recession, forecasters say.
A forecast released by the National Association for Business Economics puts the growth of gross domestic product at 2 percent for this year. The pace was 2.2 percent in the group’s previous survey, in May.
If the latest prediction proves correct, growth would be the weakest since 2002. Back then the fragile economy was emerging from a recession and grew by just 1.6 percent.
Economic growth for next year also was downgraded slightly. The economy is now projected to grow by 2.8 percent in 2008, versus 2.9 percent in the previous survey.
GDP is the value of all goods and services produced within the United States. It is considered the best barometer of the country’s economic fitness.
With the weaker outlook, the forecasters are concerned about the risk of recession. More than 60 percent of those responding cited recession “as the major risk facing the economy over the next year, while only a third cited inflation as the greatest problem,” the group said.
Those most concerned about the threat of recession tended to cite problems in the higher-risk “subprime” mortgage market and potential declines in home values as the most likely forces that could short-circuit the 6-year-old economic expansion, the group said.