Dr. Albert W. Niemi, Jr., Dean of the Cox School of Business at Southern Methodist University, is an economist, and each year he prepares his economic outlook. Following are highlights from his 2008 forecast, which emphasizes the importance of education in sustained economic prosperity. You can read Dean Niemi's complete forecast for the U.S. and the DFW region by clicking here.

U.S. Economic Outlook: Slowdown but Recession Unlikely
In light of high energy costs, the recent sub-prime mortgage crisis and housing decline, sluggish consumer spending, and geopolitical uncertainty, I believe the U.S. economy will continue to slow down in 2008. For the second consecutive year, real growth will come in at or below 3 percent.

However, I don't believe these factors will spur a recession this year. I put the probability of a recession in 2008 at 10 percent. But a recession next year becomes more likely if we see tax increases from the newly elected president.

Nonetheless, there are several dark clouds gathering on the horizon with the potential to rain on the U.S. economy. These include:

- Consumer debt, a persistent problem in our country, combined with our abysmal savings rate, which has dipped into negative territory
(-1.4 percent) for the first time since the Great Depression of the 1930s.

- Continued loss of manufacturing jobs to low-cost nations offshore (particularly China, Southeast Asia, and South Korea), along with the migration of high-wage, high-skilled positions to other parts of the world.

- London's challenge to New York City's supremacy as the financial capital of the world.

- Investors, who have traditionally invested in the U.S., starting to look more closely at burgeoning markets in Russia, India, China, Hong Kong, and Dubai.

- The growing income gap between the rich and the poor in our country. In 1975, the top 1 percent of the U.S. population owned 8 percent of our nation's total wealth. In 2005, that number had grown to 17 percent.

- The failure of middle class families' incomes to keep pace with rising health care and education costs.

Education is a key to keeping U.S. jobs at home and competing successfully in the global marketplace. Closer to home, minority education is perhaps the single greatest challenge facing the DFW economy. The large number of high school dropouts and non-college graduates among Hispanics and African Americans means that a growing number of young people—our most precious natural resource—are embarking upon their adult lives without the confidence or skills necessary to realize personally satisfying and socially productive careers.

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