According to the new figures, GDP will grow by 1.6 per cent in 2008, and a further 2.2 per cent in 2009.
This is a reduction over its previous forecasts, made in February, of 2.7 per cent and three percent respectively.
The twin threats facing the economy of rising unemployment and increasing food and fuel costs were also cited by the report as potentially becoming more severe over months to come.
Living costs are predicted to increase by 2.3 per cent in 2008 - up from February's figure of 2.1 per cent - while the consumer price index is to hit 3.8 per cent (up from 2.7 per cent) this year.
"The US economy has continued to expand, but growth has slowed as a result of the sharp housing decline, disruptions in financial markets, and high energy prices," the report said.
"Because of the recent slower economic growth, the labor market is likely to remain sluggish for a period of time before returning to better performance."