A trade group representing the nation's manufacturers on Tuesday predicted a soft landing for the U.S. economy in 2007, despite expectations that residential real estate will act as a drag on growth.
In its annual forecast, the National Association of Manufacturers forecast that industrial output would decelerate to a growth rate of 2.8 percent, or slightly below the 2.9 percent rate of expansion it expects for the overall economy.
The association said the country's manufacturing expansion over the past four quarters was "likely a cyclical peak in the pace of growth."
The association's chief economist, David Heuther said manufacturers in general would benefit from rising exports and increased business investment, though he cautioned that producers of wood and textile products, among others, would suffer from the slowdown in the housing sector.
Heuther predicted that the nation's slower economic growth would prompt the Federal Reserve to lower interest rates by 50 basis points by the middle of next year.
Declining housing prices, rising interest rates and high energy prices will dampen consumer spending, too, the report said.