The U.S. Securities Industry and Financial Markets Association predicts that U.S. economic growth will slow in the first half of next, but should perk up in the second half.

SIFMA’s Economic Advisory Roundtable unveiled its predictions for 2008. In the year-end survey, the median forecast anticipates GDP to grow but at a below-trend pace of 2.1% in 2008 as the economy works through the housing sector contraction and the effect of credit market turbulence.

It also expects the Federal Open Market Committee to reduce the target Fed funds rate by 25 basis points to 4.25% at today’s meeting. The consensus view among the Roundtable members was that the accompanying FOMC statement will emphasize risks to economic growth.

“Major factors dampening growth are the housing sector deterioration and tight financing conditions. On the other hand, factors promoting growth are the Fed’s accommodative monetary policy response to the credit market environment and the combined effect of a lower dollar and global economic expansion,” said Michael Decker, SIFMA senior managing director for economic policy. “Consumer spending growth is expected to slow in the face of housing and reduced credit availability headwinds.”

Like consumer spending, growth in business capital spending is expected to be slightly lower than the 2007 level, SIFMA reported. “Business spending will continue to benefit from generally solid corporate balance sheets and cash balances accumulated during the recent period of strong corporate profits, but growth will be well below the rates seen in recent years,” it said.

SIFMA also predicts that the housing sector decline will run through most of 2008 or beyond. “Housing prices will be the transmission mechanism to work off the excess housing inventory on the market and bring supply and demand into closer balance,” it said. “Although assigning specific dates to the beginning of the housing recovery is difficult, most respondents do not expect housing prices to “hit bottom” and begin to recover nationally until 2009.”

Finally, the reduced tax rates on dividends and capital gains enacted in 2003 are scheduled to “sunset” in 2010. “Although not unanimous, the consensus view is that the result would be lower asset values and economic growth,” it added, noting that SIFMA, separate from the Roundtable, has advocated extending the current rates on capital gains and dividends beyond 2010.