National Association of Home Builders Chief Economist David F. Seiders said economic growth for the second half of 2006 will likely to be slower than the association was expecting. This reflects a weaker housing market and mildly disappointing performances by a few other sectors, he said. Despite its downward revisions, NAHB expects overall GDP growth to average about 2.5 percent in the second half and to move up to a trend-like pace (around 3 percent) in 2007.
Seiders, writing in his report NAHB's Eye on the Economy, said, "The below-trend run of GDP growth that emerged in the second quarter of this year is taking some toll on labor market conditions, reflected in a slowdown in payroll job growth and a recent uptick in the unemployment rate. Our revised forecasts for overall economic growth point toward maintenance of modestly below-trend employment growth and a slight further upward adjustment to the unemployment rate over the balance of this year and into 2007."
Seiders said recent years' above-trend growth in GDP and employment has generated upward pressure on labor costs and core inflation (excluding food and energy). "The recent and impending slowdowns in these measures of the 'real' economy certainly will diffuse some of the inflation pressures, heading off potentially damaging 'overheating' of the U.S. economy and paving the way for additional years of solid economic expansion," he reported.
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