Bush: Economy faces risks but foundation sound

By Jeremy Pelofsky and David Lawder

WASHINGTON (Reuters) - President George W. Bush said on Monday the U.S. economy was currently facing heightened risks, but its foundation was solid and its long-term outlook was strong.

"This report indicates that our economy is structurally sound for the long-term and that we're dealing with uncertainties in the short-term," Bush told reporters after signing his annual economic report to Congress.

The report did not alter the White House forecast that the U.S. economy would grow 2.7 percent in 2008, a far rosier picture than private-sector economists who have predicted growth of just 1.6 percent this year.

Economists surveyed by the Blue Chip Economic Indicators newsletter released earlier on Monday also pegged the chances of a recession at almost 50 percent.

The White House report, however, did acknowledge the "somewhat slower-than-normal growth that began in 2007 is likely to continue in 2008."

In a rare showing of bipartisan cooperation, the Democratic-led Congress and the Republican White House hammered out a $152 billion economic stimulus package that offers tax rebates and business incentives in the hope of warding off recession.

Bush will sign the package on Wednesday and the rebate checks will likely start going out in May. "It's going to help deal with the uncertainties in this economy," Bush said.

The report also called on Congress to adopt reforms to boost refinancing in the slumping housing sector and approve free-trade agreements with Colombia, Panama and South Korea.