Economy Expected To Avoid Recession in 2008

The U.S. economy will likely avoid a recession but growth will slow to a crawl during the first half of this year, a panel of business economists forecast on Monday.

Among the panel of 49 National Association for Business Economics economists surveyed between January 25 and February 13, about 45 percent said they believe a recession will have occurred by the end of this year. But most believe it will be short and shallow.

The remaining 55 percent said a downturn will be relatively muted.

"While a slight majority of our panel of our forecasters expects the economy to avoid a recession in 2008, growth is expected to average just 0.75 percent before accelerating in the second half in response to fiscal and monetary stimulus,"

said Hughes-Cromwick.

The economists say that the stimulus package, signed into law earlier this month, with tax breaks for businesses and tax rebates worth up to $600 per individual and $1,200 per couple, could boost economic growth in the second half to a 2.8 percent annual rate.

That would bring growth for the year to 1.8 percent, still down significantly from the 2.6 percent growth projected in the prior survey taken in November.

About 40 percent of those surveyed said the fiscal stimulus package will help ward off a recession. Another 30 percent believe it will keep any recession short and mild and the remaining 30 percent polled believe the package will either have a negligible impact, is unnecessary, or is coming too late.

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