The state’s economy will slow in 2007 as the housing slowdown and lower consumer spending take hold. However, solid gains in jobs and a boom in foreign trade should keep the economy from sliding into recession, according to a forecast released Tuesday.

The Center for Continuing Study of the California Economy in Palo Alto issued the forecast as part of a larger report looking at the state’s economy for the next 10 years that concludes California is poised to outperform the nation in job and income growth.

The forecast predicts job growth will come in below 200,000 in 2007, down from 285,000 in 2005. This lower level of job growth will push the unemployment rate which has been in the high 4 percent range above 5 percent. Income growth and spending are also expected to slow, which may push state budget revenues below current projections.

In the longer term, the forecast calls for the state to add 3 million jobs during the next 10 years, with some of the biggest gains coming in technology, foreign trade, business services and tourism/entertainment.

“California has the industries that should allow the state to outpace the nation in job and income growth,” said Stephen Levy, director for the Center.

However, Levy said the state faces many challenges that could hinder that growth, including how to accommodate an additional 5 million residents, make housing more affordable and keep the state’s infrastructure from falling further behind.

On that last point, Levy said the recent voter approval of $43 billion in infrastructure improvement bonds should help, though “future rounds of investment” will probably be needed.