SIMFA predicts slow economic growth

The U.S. economy will grow a sluggish 2.1% in 2008 as a result of a contraction in the housing sector and credit-market turbulence, according to a forecast by the Securities Industry and Financial Markets Association's Economic Advisory Roundtable. The pace of U.S. economic growth will slow in the first half of the year, but will accelerate in the second half, the Roundtable said. The housing crunch is expected to decline 2008 and beyond: Most respondents said that they do not expect housing prices to "hit bottom" and begin to recover across the country until 2009. The Roundtable also conclused that the reduced tax rates on dividends and capital gains, which were enacted in 2003 are are scheduled to "sunset" in 2010, will result in lower asset values and economic growth. In the near term, the Federal Open Market Committee will reduce the federal funds rate by a quarter-point to 4.25% at tomorrow's meeting and the accompanying FOMC statement will emphasize risks to economic growth, the Roundtable predicted.