Bank Economists See Moderate Growth for U.S. Economy in Risky Environment

The U.S. economy will continue to grow at a moderate pace, with ongoing downside risks from Europe, according to a statement from the American Bankers Association.

According to the ABA’s the Economic Advisory Committee, which includes 12 bank economists from among the largest banks in North America, inflation-adjusted GDP will expand by 2.2 percent this year, compared to 1.6 percent in 2011.

“Although economic growth will pick up, downside risks have become more pronounced,” George Mokrzan, committee chairman and Huntington Bank chief economist, said. “Our consensus forecast is that the economy isn’t growing rapidly enough to push the unemployment rate below 8 percent by year-end.”

The group sees enough positives to keep the economy moderately moving forward. Consumer spending, which represents 70 percent of the economy, is expected to grow at an annualized rate of 2.4 percent this year. Household debt service has dropped, strengthening consumer balance sheets, which could support future spending. Auto sales will exceed 14.5 million units this year, a strong showing.

The committee also forecasts a mild recovery in the housing market. The committee foresees a rebound in real residential investment spending, growing at a 10.4 percent pace for 2012, but coming off a low base. However, housing prices are stabilizing at depressed levels. And with record-low mortgage rates, the committee forecasts a rise in new and existing home sales.

View Mokrzan’s comments in a video below:

The members of the 2012 ABA Economic Advisory Committee are:

EAC Chair George Mokrzan, director of economics, Huntington Bancorp., Columbus, Ohio;
Scott Anderson, director and senior economist, Wells Fargo & Company, Minneapolis
Scott J. Brown, SVP and chief economist, Raymond James and Associates, St. Petersburg, Fla.;
Sherry Cooper, EVP and chief economist, BMO Financial Group, Toronto;
Robert Dye, SVP and chief economist, Comerica Bank, Dallas;
Ethan Harris, co-head of global economics, Bank of America Merrill Lynch, New York;
Stuart Hoffman, chief economist, The PNC Financial Services Group, Inc., Pittsburgh;
Peter Hooper, co-head of global economics, Deutsche Bank, New York;
Nathaniel Karp, EVP and chief economist, BBVA Compass, Houston;
Bruce Kasman, managing director and chief economist, JP Morgan Chase, Inc., New York;
Christopher Low, chief economist, First Horizon National Corp’s FTN Financial, New York;
Gregory Miller, SVP and chief economist, SunTrust Bank, Inc., Atlanta