They are predicting moderate inflation of only 2.5%. That is their basis for avoiding a recession. They are predicting GDP growth of 2.9% - 2.5% inflation = 0.4% net GDP growth. If we see a repeat of 2007’s 4% inflation rate, then net GDP growth will be -1.1% or recession.
They are saying slow growth, moderate recession. I hope so. I’m skeptical however with the liquidity crisis still in full bloom, with the trends toward higher inflation we have seen in 2007, and with further losses from the subprime mess yet to be marked down.