Housing to Take Toll on U.S., Fed to Lower Rate, Survey Shows

The U.S. economy will grow in the fourth quarter at less than half the pace of the previous three months as the deepening housing slump and higher energy costs slow consumer spending, according to a survey of economists.

The economy will grow at an annual rate of 1.5 percent from October through December, less than forecast last month and down from a 3.9 percent third-quarter pace, according to the median of 73 economists surveyed by Bloomberg News from Nov. 1 to Nov. 8. Growth estimates for 2008 were also reduced.

Declining home values, $3-a-gallon gasoline, higher heating bills and lending restrictions will leave American consumers and businesses with less cash to spend. Federal Reserve policy makers will lower the benchmark interest rate early next year as evidence mounts the six-year expansion was in jeopardy.

``The storm clouds are gathering,'' said Nigel Gault, chief U.S. economist at Global Insight Inc. in Lexington, Massachusetts. ``On top of the housing and credit problems, the economy is now facing a second shock from oil.''

Global Insight lowered their fourth-quarter forecast to 1.3 percent from 1.5 percent and projected even slower growth in the first three months of 2008.
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