The White House is predicting that the gross domestic product will grow by 3.5 percent as measured from the fourth quarter of last year to the fourth quarter of this year, presidential press secretary Scott McClellan said. That compares with the administration's summer estimate of 3.4 percent.

The GDP, which measures the value of all goods and services produced within the United States, is the best barometer of the country's economic health.

If the administration's new estimate proves correct, it would amount to healthy but slower growth than was posted for all of 2004.

The forecast would be notable given the economic shocks from a trio of Gulf Coast hurricanes and record energy prices.

The economy thus far has demonstrated an ability to withstand these jolts. It posted a stellar 4.3 percent growth rate in the July-to-September quarter, the government reported on Wednesday.

"The economy has weathered the hurricanes and volatile energy prices," said Matthew Slaughter, member of the White House's Council of Economic Advisers.

For 2006, the White House predicts the economy will grow by a solid 3.4 percent, the same as previously forecast.

On the jobs front, the administration is predicting employment will rise by 2.1 million this year to an annual average of 133.6 million, the same as its previous forecast.

The unemployment rate, which stood at 5.5 percent last year, is expected to dip to 5.1 percent this year, slightly better than the 5.2 percent rate previously estimated.

In contrast to the overall economy, the labor market more deeply felt the devastation of the hurricanes. Before the storms, the market had done decently in creating jobs.

Employment in September declined for the first time in two years; In October payrolls grew by just 56,000, an anemic figure.

Ahead of the government's release Friday of the employment report for November, many economists are forecasting a healthy rebound, with the economy adding more than 200,000 jobs during the month.

Next year, the administration is predicting 1.9 million new jobs will be generated, boosting the annual average employment to 135.5 million. That's slightly lower than its previous estimate of 135.8 million. The jobless rate, meanwhile, should edge down to 5 percent in 2006.

In its inflation outlook, the administration is projecting consumer prices to rise by 3.8 percent this year, as measured by the fourth quarter of the previous year. That's up from the administration's previous forecast of a 2.9 percent increase.

Last year, consumer prices went up by 3.4 percent.

For 2006, the administration predicts consumer prices will moderate, growing by 2.4 percent.

The administration's figures are largely in line with those of private economists. The new forecasts, which will be used for President Bush's 2007 budget, were mainly developed by a team from the CEA, the Treasury Department and the Office of Management and Budget.

The CEA's chief, Ben Bernanke, did not participate. He is Bush's choice to take over the Federal Reserve after chairman Alan Greenspan leaves Jan. 31, after 18-plus years at the helm.

-- JEANNINE AVERSA (AP Economics Writer)