Academic journal article ABA Banking Journal

EAC Forecast: Less Good, but Still Positive

Academic journal article ABA Banking Journal

EAC Forecast: Less Good, but Still Positive

Article excerpt

Describing the economy as being in a "soft patch," but improving, the ABA Economic Advisory Committee at its mid-year press briefing predicted GDP growth would rise to 3% by yearend and continue at that level through 2012. The average GDP growth for all of 2011, however, was expected to be 2.4%, lower than what the group of bank economists had predicted in January. (At a separate press briefing in late June, Federal Reserve Board Chairman Ben Bernanke reported a similar moderation of expectations.)

The bank economists were not pessimistic, however. EAC Chairman Peter Hooper, chief economist at Deutsche Bank, New York, told reporters, "We think things are improving. It's going to be a long haul ... getting the labor market back to where we want it to see it. But we're feeling a little bit better about the uptrend expected ahead."

The slower first-half pace was due to higher-than-anticipated oil prices and supply chain disruptions from the catastrophic events in Japan. The effects of both of these factors have begun to moderate, Hooper said.

On the plus side, business investment spending is forecast to increase 7-8% through yearend and into 2012. Also, business credit is growing at a 5-6% rate, said Hooper. …

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