If there is a recession, it probably will be short and shallow, economists said.
Forecasters downgraded their projections for economic growth. They now predict the economy, which grew by 2.2 percent last year, will slow to 1.4 percent this year. That"s lower than the 1.8 percent growth projected in February.
If the new figure proves correct, it would mark the weakest growth since the last recession in 2001.
Next year, the economy should grow by 2.3 percent, less than previously forecast and a pace that is still considered subpar.
"Although housing and credit markets will gradually loosen their grip, U.S economic growth is expected to only slowly return to health," said Ellen Hughes-Cromwick, president of NABE and chief economist at Ford Motor.
Given the outlook for sluggish overall economic activity, companies are likely to remain cautious in their spending and hiring.
The unemployment rate, which averaged 4.6 percent last year, will move higher. Forecasters predict the jobless rate will hit 5.3 percent this year and 5.6 percent next year.
Forecasters are hopeful that the housing slump -- in terms of home sales -- will hit bottom this year. However, economists were divided over whether the low point would be reached in the second, third or fourth quarters of this year. House prices, though, are still expected to drop this year and next.
On the credit front, economists predict conditions will improve in the second half of this year.