The National Association for Business Economics has just released a survey of 47 top forecasters, noting that the economy is expected to slow in 2007. Forecasters predict a growth rate of of 2.7%, which would be the lowest since 2002 saw modest growth of just 1.6%.

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 consumers will get a break on inflation from falling energy prices

Paradoxically, what would appear to be negative news isn’t all that bad. Slow economic growth, while it can lead to reduced employment and a host of other issues, actually coincides with manageable inflation numbers which, in turn, should prompt the Federal Reserve to either keep rates steady or begin an easing of rates. With money cheaper for bank-to-bank loans, the interest rates that affect consumers - the prime rate and mortgage rates - should follow suit. I’m simplifying this a bit, of course, but the general concern for those looking to finance or re-finance a house is rising rates. With slow growth and inflation in check, 2007 doesn’t appear to be a year in which rates will rise significantly.

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Tags: bank loans, economic forecasters, economics, energy prices, federal reserve, inflation, interest rates, prime rate

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