WASHINGTON, Dec. 19 (Xinhua) -- The Bush administration projects that the U.S. economy will continue to expand at a moderate pace in the coming year, according to the Treasury Department on Tuesday.

    "Real GDP is projected to rise 3.1 percent and 2.9 percent during 2006 and 2007, respectively," said the Treasury in its report to Congress on international economic and exchange rate policies.

    This is similar to the U.S. historical average over the last 20 years, it added.

    "The U.S. economy continued to grow at a healthy pace during the four quarters ending in the third quarter of 2006, although growth slowed somewhat in the most recent quarter," said the report, which the Treasury is required to deliver to Congress every six months.

    Job gains also moderated through the first 11 months of 2006, but the unemployment rate remained low by historical standards, it said. "The labor market is expected to remain strong with little change in employment growth or the unemployment rate" next year.

    The administration also projects the budget deficit will continue to shrink, down to 127 billion dollars in the fiscal year of 2007, which began on October 1 this year, or 0.7 percent of GDP, according to the report.

    The federal budget deficit in the fiscal year of 2006, which ended on September 30, 2006, was 248 billion dollars, about 71 billion dollars less than in the 2005 fiscal year.