The U.S. economy will grow this year as consumer and business spending strengthen along with job growth, the American Bankers Association said today.
Gross domestic product in the world’s largest economy will expand 3.3 percent in 2011, according to the median estimate of the ABA’s 14-member economic advisory committee, which represents banks including Bank of America Merrill Lynch and Wells Fargo & Co. The U.S. will add 2.1 million private jobs this year, up from 1 million in 2010, the economists said today at a news conference in Washington.
“The economy is transitioning from reliance on monetary and fiscal stimulus to a sustained expansion in the private sector,” Stuart Hoffman, the acting committee chairman and chief economist at PNC Financial Services Group Inc. in Pittsburgh, said in a statement. “Businesses and consumers are feeling more confident about the economy.”
The economy needs faster job growth to keep consumers spending and ensure a self-sustaining recovery. Federal Reserve Chairman Ben S. Bernanke said in Senate testimony last week it may take four or five years for the labor market to “normalize fully,” indicating no change in the central bank’s plans to purchase $600 billion in bonds.
The committee’s GDP projection is above the median estimate from a Bloomberg News survey of 71 economists this month for an expansion of 3.1 percent in 2011. The World Bank this week projected 2.8 percent U.S. growth for 2011.
The unemployment rate will fall to 9.4 percent, the ABA said, above the 9.3 percent rate forecast in the Bloomberg News survey that tallied 65 responses.
“We’re cautiously optimistic about the outlook for this year,” Scott Anderson, senior economist at Wells Fargo Securities Inc. in Minneapolis and a member of the committee. “There won’t be barn-burning growth as unemployment continues to whimper along, but consumer spending should pick up and lending should grow.”
Inflation as measured by core personal consumption expenditures is expected to rise by 0.1 percentage point to 1.0 percent in 2011, according to the ABA forecast.
The bankers’ group said it expects the Federal Reserve to keep its target interest rate unchanged. The yield on the benchmark 10-year Treasury note will rise to 3.71 percent by the end of this year from 3.3 percent in the first quarter, the ABA said.
The ABA represents the $13 trillion banking industry and its 2 million employees, according to the statements.
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