Friday, June 7, 2013

Bank Economists See Stronger Growth Ahead

According to the Economic Advisory Committee (EAC) of the American Bankers Association, which includes 13 chief economists from among the largest banks in North America, inflation-adjusted GDP growth for 2013 will be 2.1 percent over the course of the year, and is expected to increase to 2.8 percent in the first half of 2014.

Although economic growth has been constrained in recent quarters, it will accelerate later this year and into 2014 as external pressures and fiscal drag ease.

The bank economists believe the housing market has finally entered a sustainable recovery. The group sees the housing recovery gaining significant strength this year, with improving construction levels and rising home sales and prices. The committee forecast is that home prices nationwide will rise solidly and residential investment will increase 15 percent in 2013.

“This strong growth demonstrates that housing has finally caught up with the broader economic recovery,” Anderson said. Consumers are on a stronger financial footing and have regained confidence. The group believes consumer spending will support economic growth over the next two years.

“Higher equity prices and rising home values, along with declining gas and energy prices, have helped consumers cope with rising taxes and reduced federal spending,” Scott Anderson, committee chairman and Bank of the West chief economist, said. “The wealth effect created by rising home values will boost consumer sentiment and spur increased spending.”

Read the full release. Read the detailed EAC forecast numbers.

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