Economic Forecasts

Global economic growth will slow for a second straight year in 2008 as tighter credit conditions and higher oil prices weaken expansions in the U.S., Japan and Europe, the World Bank said in an annual forecast. The world economy will grow 3.3% this year, down from an estimated 3.6% pace in 2007 and 3.9% in 2006, the bank said. The U.S. economy, the world's largest, will expand 1.9%, compared with 2.2% last year, it said. Japan's gross domestic product is forecast to increase 1.

The International Monetary Fund cut its 2008 forecast for world growth Tuesday, saying the global economy will deliver the weakest performance in five years as U.S.-originated financial strains intensify. The IMF said no country would escape fallout from the crisis in the U.S. sub-prime mortgage market, where loans made to less creditworthy borrowers were packaged into securities by Wall Street firms and sold around the world.

Brushing aside conventional wisdom, UCLA economists say California and the nation will survive the housing slump and job losses without plunging into recession -- although it will still be miserable for many Americans. "We are holding firm: no recession this time," UCLA Anderson Forecast Director Edward Leamer said in a report being released today.

Under pressure from falling home values, high oil prices and rising unemployment, the economy in California and the nation will perform anemically in the coming months -- but there still won't be an actual recession, UCLA forecasters say. "I am holding on to what is now a shaky view: no recession this year," said economist Edward Leamer, director of the quarterly UCLA Anderson Forecast, which is being released today.

Nearly one-third of the country's top executives expect to cut payrolls in the coming months, reflecting fallout from the housing bust as well as soaring energy prices. At the same time, a survey by the Business Roundtable, released Wednesday, showed that most executives expect sales and capital investment to remain at current levels or even improve over the next six months.

Holiday sales are expected to grow at the slowest pace in six years as shoppers worry about jobs, the housing and stock markets and high gasoline and food prices, according to a forecast from the National Retail Federation being released today. The outlook from the retail trade group joins other weak holiday predictions issued so far that probably will lead to aggressive discounting and pre-Thanksgiving sales blitzes as stores try to pry dollars from frugal shoppers.

Housing prices will hit bottom some time next year, but the California economy will be in distress for months to come, according to a closely followed UCLA economic report scheduled to be released today. In a series of dire predictions echoed by experts throughout the state, the UCLA Anderson Forecast says that unemployment will continue to increase, consumer spending will decline and tax revenues will plummet.

The nation's worsening economy will continue to hemorrhage jobs next year, prolonging a deep recession that won't recover until at least 2010, forecasters at Chapman University said Tuesday. The U.S. unemployment rate is expected to climb from an estimated 5.7% this year to 7.8% next year as consumers pull back their spending, sending businesses already hurting from the credit crunch into further despair.

Warned that the economy may get considerably worse, President-elect Barack Obama has more than tripled the size of the economic stimulus package he embraced during the campaign and is aiming to create or save 3 million jobs, up from 2.5 million, transition officials said Saturday. Obama's team is crafting a massive new economic stimulus package to reach his revised job goal.

The global economy will remain strong this year as Europe and Asia compensate for a slowdown in the U.S., International Monetary Fund Managing Director Rodrigo de Rato said Sunday. "We are moving into another year of strong growth," De Rato told reporters in Basel, Switzerland. "We certainly see strong growth in Europe, a continuation of growth in Japan, and we see very strong growth in many emerging economies."