WASHINGTON — Members of the Credit Union Economics Group gave a "modestly pessimistic" forecast this year as a result of the continued slowing of the housing market and increasing energy prices.

The members said they expect overall economic growth, as measured by real gross domestic product, has been reduced from previous forecasts for yearend and 2008 with unemployment creeping up to 5%. Despite a reduction in the expected ARM resets, consumers will be challenged by the overall tightening of credit and slower employment and economic growth.

"We are clearly in a correction phase of this economic expansion," CUNA Mutual Group Chief Economist Dave Colby said. "While our forecast does not indicate a recession in 2008, the chances of economic downturn have increased significantly over the past six months. I would put recession possibilities in the 35% to 40% range, and rising. Consumers are becoming decidedly more cautious with respect to big-ticket spending and taking on new debt obligations."