The economic slowdown in the United States will weaken growth in the world economy from 3.8% in 2006 to 3.2% in 2007, according to the Conference Board’s World Outlook, Winter 2007.

“The health of the U.S. economy casts a long shadow over global growth,” said Kip Beckman, principal Research Associate. “A sharper-than-expected decline in the U.S. dollar would hurt countries that rely on the U.S. market for their exports, such as Canada, Mexico and those in the Asia-Pacific region.”

The United States is facing tumbling home sales nationally and falling prices in some parts of the country, as well as weaker vehicle and retail sales and orders of durable goods.

The Conference Board’ forecasts that the U.S. economy will have a soft landing, although the odds of a hard landing have increased somewhat over the past 12 months. The U.S. is expected to avoid slipping into a recession because a weaker U.S. dollar will boost American exports and business investment will remain strong, leading to economic growth of 2.2% in 2007.

After performing relatively well in 2006, economies in western Europe and Japan will weaken in 2007, dragging down global growth. Europe’s real gross domestic product (GDP) is expected to grow by two% in 2007, but tax increases in Germany and a stronger euro will negatively affect the short-term outlook. The slowdown in the United States will affect the Asia-Pacific region by slowing Asian exports and weakening real GDP growth from the 5.3% recorded in 2006 to 4.6% in 2007.