Newspaper article The Christian Science Monitor

Edward Lazear: Lower Growth Expected for 2008

Newspaper article The Christian Science Monitor

Edward Lazear: Lower Growth Expected for 2008

Article excerpt

With a national election less than a year away, this is a sensitive time to be the president's chief economist.

The revised forecast released Thursday by Edward Lazear, chairman of the President's Council of Economic Advisors, predicts the US economy will continue to move forward in 2008. But the Bush economic team has lowered its expectations for economic growth next year and boosted its predictions for unemployment. Softening growth and rising unemployment do not tend to put voters in a cheery mood.

The administration is predicting that inflation-adjusted gross domestic product will grow 2.7 percent in 2008, down from an earlier estimate of 3.1 percent. The unemployment rate is predicted to climb to 4.9 percent in 2008, up from a historically low 4.6 percent rate this year. The housing market's woes played a key role in triggering both changes, Mr. Lazear said.

The administration forecast is somewhat more optimistic than the 1.8 to 2.5 percent growth range Federal Reserve policymakers are predicting for 2008. And it is far more bullish than the view expressed earlier this week by former Treasury Secretary Lawrence Summers. In a Financial Times essay, Mr. Summers wrote, "The odds now favor a US recession that slows growth significantly on a global basis."

Lazear was asked about Summers's remarks at a Monitor-sponsored breakfast with reporters held Thursday morning. "We view the prospects for lower growth as certainly being one that we take as significant. There is no question that there are signs in the economy right now that things are solid," he said. "There are a number of very positive indicators, but there are some uncertainties. There is no denying that."

In a conference call with reporters later Thursday morning, Lazear cautioned that forecasting is "a pretty inexact science."

Lazear brings a stellar resume to the inexact science. After earning bachelor's and master's degrees in economics at the University of California, Los Angeles, he went east to earn a doctorate at Harvard University in Cambridge, Mass. Lazear is on leave from the faculty of Stanford University's Graduate School of Business in California, where he has taught since 1992. …

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