White House cuts 2008 economic forecast

By Emily Kaiser and Caren Bohan

WASHINGTON (Reuters) - The White House cut its forecast for U.S. economic growth in 2008 on Thursday and acknowledged that troubles in the housing market had been "more pronounced" than expected.

But even as private economists grow increasingly worried about the risk of a recession, the Bush administration said the economy was resilient and predicted the six-year expansion would stay on track.

In its twice-yearly forecast, which will be incorporated in the administration's fiscal 2009 budget proposal due early next year, the White House said it now expected real gross domestic product to grow 2.7 percent in 2008, down from a June forecast for 3.1 percent growth.

"We are forecasting solid growth for 2008," top White House economist Edward Lazear told reporters.

He added that "2.7 percent is still a good, solid growth rate and that is especially the case given that we have been hit with a pretty significant slide in the housing market."

In housing, the decline "has been more pronounced than we forecast at the time that we were doing our midsession review and that's built into the forecast for next year," said Lazear, who is chairman of the White House Council of Economic Advisers.

The administration's forecast was still above Federal Reserve policy-makers' projection of 1.8 percent to 2.5 percent real, or inflation-adjusted, GDP growth for 2008.

Private economists in the closely watched Blue Chip Economic Indicators survey have predicted sluggish growth through the first half of 2008.