Thursday, January 12, 2012

Bank Economists See Gradual Improvement In U.S. Economy

The U.S. economy will continue on a course of moderate growth with relatively low inflation and steady job growth in 2012, according to the forecast from the Economic Advisory Committee of the American Bankers Association.

According to the committee, which includes 11 chief economists from the largest banks across the country, inflation-adjusted GDP growth rose to an annualized pace near the long-term potential of 2.5 percent in the latter half of 2011 and will stay on this path throughout 2012.

“Despite severe shocks in recent years, the economy has shown resilience as it continues a gradual march forward," George Mokrzan, committee chairman and Huntington Bank chief economist, said. “The economy is gaining momentum, with strong capital expenditures from businesses and moderate consumer spending setting the stage for sustained growth.”

Even though consumer confidence remains weak, the committee expects consumer spending to continue to grow by a 2.0-2.5 percent pace each quarter and by 2.4 percent this year. That rate, along with strong business spending, will keep the economy on a slow, but steady path forward.

Despite a moderately positive outlook, the group sees several significant downside risks to the U.S. economy, including the European debt crisis, challenges surrounding U.S. fiscal policy and geopolitical risks.

“Europe will likely experience a mild recession this year, which will slow U.S. exports, but will not dramatically affect our economy unless Europe’s financial challenges become much more severe,” Mokrzan added.

Read the release.

See the detailed forecast.

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