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Economists have cut their 2008 growth outlook for the third month in a row because the housing slump is worse than originally feared, according to the Blue Chip Economic Indicators newsletter, released Wednesday. Economists surveyed now see the economy expanding 2.4% for the year, down from a 2.6% forecast in September and a 2.8% estimate in August. They believe troubles in the housing sector will likely spill over into consumer spending and business investment. The 52 economists polled are forecasting 2% growth for 2007. Housing starts are projected to be their lowest since 1993, and home prices could post their first y-o-y decline since the 1930s. Because growth is expected to remain tepid and inflationary risk to ease, most of the economists surveyed anticipate at least one more rate cut by the Fed. The survey was completed in October, prior to the release by the Labor Department of upwardly revised employment figures (full story).

Sources: Reuters
Commentary: Poole: Markets Stabilizing But Fragile; Yellen: I'm Open To More Rate MovesDon't Write Inflation's Obituary, Just YetWhat Does the Personal Savings Rate Tell Us About the Economy?
Stocks/ETFs to watch: SPY, DIA, QQQQ

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Source: Economists Reduce 2008 Growth Outlook for Third Time