The U.S. economy is expected to grow by 1.8% in 2008, but Americans’ purchasing power and household balance sheets are in worse shape than they were one year ago, according to an outlook from the Conference Board of Canada.

“While economists continue to debate whether or not the U.S. economy is technically in recession, it certainly feels like one to many Americans — especially those facing home foreclosures and those who lost their jobs,” says Kip Beckman, principal research associate. “And with gas prices surging above $4 per gallon, it is not surprising that consumer confidence is at its lowest level since the early 1990s.”

Declining growth in households’ real incomes is attributable to the weakening job market and rising energy and food costs. Around 325,000 jobs have been lost in the first half of this year, and losses have been widespread across many sectors of the economy. Although retail sales-with the notable exception of automobiles-have been stronger than expected in the first half of the year, consumer spending is forecast to grow by just 1.5% in 2008.

The U.S. trade sector is expected to keep the economy from entering a deep downturn. The weak U.S. dollar and strong global demand are bolstering export growth.