White House economic adviser sees slow growth rate in late summer months

Thursday, October 5th 2006, 3:41 pm
By: News On 6

WASHINGTON (AP) _ The economy probably slowed considerably in late summer, reflecting a slumping housing market, a White House economic official said Thursday.

Allan Hubbard, director of the National Economic Council, predicted that the pace of growth from July through September could range from 1 percent to low 2 percent.

The Bush administration's fresh observations on the economy come with the election season in high gear. Voters' choices at the polls on Nov. 7 are likely to be shaped in part by how they are faring economically. The administration says that Americans are mostly better off, while rival Democrats disagree.

The government will release its first estimate of economic growth for the third quarter on Oct. 27.

The National Association for Business Economics is forecasting that the economy will expand at a 2.6 percent rate in the third quarter. But other economists think the growth rate will be closer to 1 percent, the low end of Hubbard's prediction.

The magnitude of the economy's slowdown will hinge in large part on how much altitude the once high-flying housing market loses.

Federal Reserve Chairman Ben Bernanke on Wednesday said a ``substantial correction'' was taking place in the housing sector. He estimated the housing slowdown would trim about 1 percentage point off economic growth in the second half of this year.

But the fallout from the cooler housing market should be cushioned by other positive factors, including good job creation and income growth, Bernanke said.

The economy grew at a 2.6 percent pace from April through June, compared with a 5.6 percent pace over the first three months of the year, which was the strongest spurt in 2 1/2 years.

For all of 2006, Hubbard believed the economy will have grown by about 3 percent, a respectable rate according to economists.