U.S. economy's future could be lean

DALLAS, Dec. 31 (UPI) -- A sluggish economy may weigh down corporate profits, making for potentially leaner times in 2008, some analysts say.

"The domestic part of the economy is very close to (a) recession," said Michael Cosgrove, publisher of The EconoClast, a market newsletter based in Dallas.

Cosgrove said in a report Monday in The Christian Science Monitor that the "best situation is probably flat profits for 2008" or maybe a modest increase.

Various non-Wall Street factors come in to play in 2008, namely politics, the Monitor report said.

"The uncertainties generated by the election are extremely high," Cosgrove said.

Only as the campaigns progress will investors get a clearer picture of potential new policies ranging from taxes to trade to healthcare, Cosgrove said.

Other analysts also have been lowering their expectations for corporate earnings.

"The growth rate ... has pretty much been dropping steadily" in recent weeks, said John Butters of Thomson Financial, which watches earnings of S&P 500 companies.