WASHINGTON – 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.
Some private economists believe the growth rate will be closer to 1 percent. Others think the economy will do somewhat better than that, but still turn in a subpar performance.
The National Association for Business Economics is forecasting that the economy will expand at a 2.6 percent rate in the third quarter.
The magnitude of the 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.