Tags: Bank | Economists | soft | Sustained | US | Growth

Bank Economists See Soft but Sustained US Growth

Tuesday, 14 Jun 2011 11:11 AM

U.S. economic growth will remain soft for the foreseeable future but the economy is unlikely to slip back into recession, according a survey of bank economists.

The poll conducted by the American Bankers Association sees growth picking up in the second half of the year following an anemic first quarter that has seen employment growth grind lower.

That will leave the overall expansion in U.S. gross domestic product up 2.4 percent for 2011 as a whole. Respondents saw just a 15 percent chance of another recession this year or next.

Peter Hooper, chief U.S. economist at Deutsche Bank, said at a press conference that while consumer spending and residential investment — two key problem areas in the recession — were not expected to make major contributions to the recovery, they should also not create a major drag.

Inflation is expected to come down following some elevated, energy-linked readings at the start of this year, converging toward the Federal Reserve's implicit target of 2 percent, or a bit below through the remainder of this year and in 2012.

The ABA economists do not foresee another round of bond buying by the Fed.

Instead, the U.S. central bank was seen beginning to pull back on its extraordinary stimulus to the economy in the middle of next year.

However, Hooper cited a number of downside risks to economic growth, including the possibility of a renewed spike in oil prices or a fresh slump in housing. The prospect of sharp government spending cuts as Congress jostles over the budget could also create some hurdles.

"Lingering high unemployment and further weakness in home prices will add to consumer caution," Hooper said.

© 2017 Thomson/Reuters. All rights reserved.

 
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U.S. economic growth will remain soft for the foreseeable future but the economy is unlikely to slip back into recession, according a survey of bank economists. The poll conducted by the American Bankers Association sees growth picking up in the second half of the year...
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2011-11-14
Tuesday, 14 Jun 2011 11:11 AM
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