GDP growth is forecast to slow to 2.7% in 2007

Restrained by a worse-than-expected slump in housing, the economy will grow at the slowest pace in five years in 2007, leading economic forecasters say.

They predict that consumers will get a break on inflation from falling energy prices.

The survey of 47 top forecasters, to be released today by the National Assn. for Business Economics, found a greater expected effect from the ailing housing market this year than did the previous forecast in November.

Stronger consumer spending will help offset the housing drag, according to the survey.

The panel predicted that the economy would grow by 2.7% this year. That would be the slowest annual increase in the gross domestic product since a 1.6% rise in 2002, when the economy was pulling out of the last recession. In 2006, the GDP rose by 3.4%.

GDP measures the value of all goods and services produced in the United States. It is the broadest gauge of the country’s economic health. The association’s November forecast put GDP growth this year at 2.5%.

The slight upward revision occurred even though the forecasters now believe that housing construction will plunge by 14.9% this year. That would be nearly three times as big as the 5.5% fall in residential construction they had projected in the earlier survey.

But the economic forecasters see a cushion to the sharp drop in housing: stronger than previously expected consumer spending. This measure will grow by 3.2% in 2007, the same as last year, the panel said.

The forecasters also saw good news on inflation.

They predicted that consumer prices would rise by just 1.9% this year, down sharply from the 3.2% increase last year and the best showing in five years.