Traders work in the Oil Futures pit at the New York Merchantile Exchange in New York Nov. 21, 2007. Oil fell on Wednesday after hitting an all-time high above $99 a barrel as stockpiles rose at a key U.S. storage hub and concerns mounted over the health of the world's top economy. (Xinhua/Reuters Photo)

    LOS ANGELES, Dec. 5 (Xinhua) -- Despite rising oil prices, sinking housing prices and a turbulent stock market, the U.S. economy will escape recession in 2008, said a UCLA study released Wednesday.

    According to the quarterly UCLA Anderson forecast, California and other parts of the country will be saved by some apparent weak spots in the economy.

    The loss of 3 million manufacturing jobs early this decade means there is little room to cut more positions, while most of the damage to the economy from the current housing slump will be over by the end of next year, the report said.

    Meanwhile, the weak dollar will help U.S. exports, aiding manufacturers in California and elsewhere in the country.

    UCLA economists said in the report that California's economic outlook mirrors the country as a whole, "It gets pretty ugly, but still no recession."

    The state will be hit hard by the weak real estate market, falling government revenue and the Hollywood writers' strike.

    The U.S. Federal Reserve will meet Tuesday and is widely expected to cut its benchmark interest rate for a third time to help avoid a recession. That reduction -- and more next year -- will be needed to ward off a recession, the forecast said.

    The report also predicted that U.S. stock markets would rise 10percent to 12 percent next year amid calming credit markets and modest economic growth.