By Joanne Morrison

WASHINGTON (Reuters) - The U.S. economy has already slipped into recession or will do so this year, according to a forecast of economists in the Blue Chip Economic Indicators Survey released on Thursday.

But the recession is not expected to be particularly deep or protracted, eased by a string of interest rate cuts from the Federal Reserve and an economic stimulus package signed into law that will put tax rebates in the hands of consumers later this year, the closely watched survey showed.

"More than half our panelists now say the economy has already entered or will slip into a recession this year," the newsletter wrote. Almost half predict an outright decline in jobs in 2008.

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"Real personal consumption expenditures are expected to register the smallest year-to-year increase in 17 years, pretax corporate profits the first decline since 2001, nonresidential fixed investment the slowest growth since 2003, and total industrial production the most tepid gain since 2002," the newsletter wrote.

Economic data over the past month helped drive down the forecasts of the panelists, taken in a survey between April 2 and 3, particularly the latest March unemployment report showing a third straight monthly decline in jobs.

The consensus forecast calls for growth in gross domestic product of 0.1 percent in the first quarter, unchanged from a forecast a month ago, but for the second quarter growth is seen also at 0.1 percent, down from 0.2 percent forecast a month ago.

For all of 2008, the economy is expected to expand by 1.4 percent, down from 1.5 percent projected a month ago and 2.6 percent projected in September when the Federal Reserve first began to cut interest rates.

Since September, the central bank has cut its target federal funds rate 3 full percentage points and is expected to cut further when policy makers meet later this month.

CONSUMER SPENDING SLOWS

Although consumer spending is expected to rebound in 2009, a weakening job market, coupled with higher-than-expected inflation, will cap growth in real disposable personal income to 2.1 percent in 2008.

In 2009, lower inflation is expected to boost real income growth, but the absence of this year's federal tax rebate check program and continued weakness in the job market is expected to hold year-to-year growth in disposable personal income to 2.1 percent.

The outlook for business investment has also deteriorated, with expectations for growth this year in nonresidential fixed investment to be 2.5 percent, nearly a full percentage point lower than prior estimates.

(Reporting By Joanne Morrison; Editing by Leslie Adler)