U.S. ECONOMY WILL AVOID RECESSION, UCLA FORECASTS

California's economy will limp to the brink of recession this year, thanks to a decline in jobs and the fallout from the subprime mortgage crisis, according to the latest quarterly UCLA Anderson Forecast.The forecast says that 2007 will see a peak in subprime mortgage resets but adds that mortgage defaults are expected to continue well into the first half of 2008. As a result, the housing market will continue to drag on the state's economy until early 2009, with expected job growth of less than 1 percent through Sept. 2008 and unemployment topping out at 5.9 percent by the end of next year."California is in for at least another year of economic doldrums, with rising unemployment, weak job growth, and a slowdown in all broad indicators," said UCLA economist Ryan Ratcliff.Nationally, the U.S. economy also will just barely avoid recession and begin making a slow move toward economic recovery in 2008. UCLA's forecast calls for growth in the gross domestic product (GDP) of more than 1 percent for the fourth quarter of 2007 and first quarter of 2008, with a return to 3 percent in 2009, avoiding the traditional definition of a recession, which is two consecutive quarters of a GDP decline.UCLA's forecast also lowered predictions for U.S. housing starts for 2007 to more than 1.1 million units, but predicts a modest climb to 1.4 million units by the end of 2009.