The U.S. isn't set for either a double-dip recession or an economic boom in 2012, a group of Wells Fargo economists predicted in a conference call Thursday.

A "subpar" 2 percent annual economic growth rate, slow job growth and modest growth in consumer spending will keep things moving in the next year, the economists said. The housing market, however, will continue to struggle and won't likely become normal for at least another three years.

But the big unknown is Europe. Failure by the continent's leaders to find a solution to its financial turmoil could cause another global credit crunch like in late 2008 - and the economists still put that in the "could happen" category.

Economists are expecting a mild recession throughout Europe in 2012 as a number of stressed countries struggle to get their debt under control. But should the continent's leaders not be able to keep problems in Italy from spiraling downward, there could be another global recession.

"Everything is predicated on Europe not blowing up," global economist Jay Bryson said.

The only available backstop against that is the European Central Bank, chief economist John Silvia said. It won't likely act unless national legislatures throughout the continent agree to fiscal rules and structural reforms, he said.

But the economists said they are optimistic.

"At the end of the day, rational people do things in their own self-interest," Bryson said. "Italy blowing up is in nobody's self interest."

Political gridlock a worry

While not expressing a particular political viewpoint, Silvia did voice concern about gridlock. Should President Barack Obama be re-elected while Congress remains in Republican hands, that's likely to continue, he said.

With reforms to entitlements and other spending needed, that's a problem, Silvia said. He said economists would be closely watching next year's election, studying the rhetoric to see how close to the middle candidates come.

"Gridlock is not good, from my point of view, when there are problems that need to be addressed," Silvia said.

Housing still weak

This year saw the fewest housing starts in modern memory. Next year, the market will remain weak but increase slightly, senior economist Mark Vitner said.

Demand is highest for apartment construction, but developers have had difficulty getting financing for new projects.

Existing home sales will continue to greatly outpace new home sales, Vitner said.

And builders aren't likely to get back to work anytime soon. The shadow inventory - foreclosures, potential foreclosures, bank-owned homes off the market and homes people would like to sell - is likely to come on the market as conditions improve.

Home prices will continue to decline as distressed sales become a larger part of the sales mix, Vitner said.

When will we see a normal year? 2015 or 2016, he said.

There was good news at the start of the holiday shopping season. But the reported spending increase doesn't take into account that retailers opened earlier and closed later to get more shoppers, he said.

"They really pulled out all the stops," he said.

Careful consumers

Looking ahead to next year, consumer spending is expected to increase modestly and gain momentum. Both spending and saving will be buoyed by a decline in food and energy prices, Vitner said.

But continued weakness in employment will keep any major increases in spending from materializing, he said.

"It's going to be very hard for consumer spending to grow at a rapid pace unless we see significant growth in jobs," Vitner said.