**IMF: Recession unlikely in U.S.
**By MIKE CORDER
THE HAGUE, Netherlands
Fallout from defaults on risky mortgages and a housing slump will slow U.S. growth in 2007, but the economy is headed for a “soft landing” and will likely begin a recovery in early 2008, the International Monetary Fund’s director said Thursday.
Rodrigo de Rato's comments to reporters in The Hague echoed those of Federal Reserve Chairman Ben Bernanke in his testimony to Congress' Joint Economic Committee a day earlier. De Rato said the IMF would likely cut its 2007 growth estimates for the U.S. economy from the 2.9 percent it had forecast last September when it next publishes its World Economic Outlook in mid-April. It put global growth at 4.9 percent. "We probably will see certain lesser growth (in the United States) than we saw in September," De Rato said, adding that the change would not be "dramatic." But the IMF's central scenario for the U.S. in 2007 is "still for what you could call a soft landing," he said. "We think that the effect of the housing sector is a limited one because employment figures and income for families is very strong," he said. "It is clear that (housing woes) will not effect the overall stability of the financial sector in the United States." He said the IMF will closely monitor whether U.S. consumer spending weakens as a result of the housing sector problems. Weak home prices and rising mortgage payments have hit people with bad credit or low incomes hardest -- and the banks that lend to them -- and delinquencies and foreclosures in the "subprime" market are soaring. De Rato's comments came as U.S. data showed the economy grew at a sluggish 2.5 percent pace in the final quarter of last year. Like de Rato, Bernanke also said the troubles didn't appear to be spreading to the overall economy. "At this juncture ... the impact on the broader economy and financial markets of the problems in the subprime markets seem likely to be contained," he said. Some experts -- including Bernanke predecessor Alan Greenspan -- have said that the U.S. economy may be heading for a recession, due to the end of the housing boom and slowing growth in corporate profit margins. Greenspan put the risk of a recession at as high as one in three. But, De Rato predicted the U.S. economy would begin gathering steam by "the end of the year, beginning of next year." De Rato was in the Netherlands visiting with the Dutch prime minister and finance minister, and spoke to reporters at the Clingendael Institute.