The year of 2007 wasn't disastrous but surely wasn't any fun. People are looking forward 2008 and the great recovery that is in store for them but chance are that it isn't coming. 2008 will be a year when the economy is still dealing with the problems starting at the end of 2006 and clearing themselves out. Therefore, the economy should be recovering in 2008 but won't be doing much else besides healing its old wounds and preparing for a strong 2009.

Housing Problems: The price and value of houses has declined and isn't likely to make a quick recovering. What makes this so important is that it didn't affect low end housing only but also made its way into high income properties. In some places these high income properties have declined more in value then the lower end housing simply because no one wants to pay lots of money for a house right now. Since mortgages are more in cost then the value of the house it has a dampening affect on spending.

Consumer Spending: Consumers have maxed out their credit cards, don't see big raises and fully extended their lines of credit and won't have a lot of money to spend this year. When we add to the mix that houses are worth less then their mortgages it won't be a surprise that most families won't be flooding the malls and filling up their shopping carts. These consumers simply can't afford it and won't be able to fit another penny on their credit cards.

Oil Prices: Rumors are swirling around that Saudi Arabia knows that it will eventually run dry and won't be increasing production to speed up their demise. Thus it is in the best interest of most oil producing countries to keep production slow and increase the amount of money they can get for each barrel.

With oil prices running around $100 dollars it is possible that people will pay more for the oil that goes into automobile gas tanks, heat and other products. This will create further stress on the American family and they will respond by spending less on non-essential items.

Government Tax Revenue: Taxes aren't expected to stagnate in 2008 but local governments and the federal government will continue to spend out of control. One of the reasons why tax revenues are stagnant is because consumers won't be spending as much money and sales tax will decline. Likewise, new industries that produce high wage jobs won't be springing up anytime soon while many current industries may go out of business.

With the war in Iraq, the government bailout of the sub-prime crisis, increased spending on alternative energy grants, a whole new round of the mini-baby boomers relying on government help and student loan disbursements, with an aging workforce that is just starting to retire the government is going to have a lot of pressure placed on it. Many local and state governments (i.e. Michigan) may attempt to raise taxes to pay for needed services.

Declining Dollar: The dollar will likely continue to decline this year as businesses change focus from making domestic products to selling products with the advantage of the cheaper dollar on international markets. The growth in the economy will be around 2% this year and may be much higher in 2009 as the business world adjust to their new environment.