Bank Economists Expect Sustained Economic Expansion

A group of bank economists believe the country’s economic health is steadily improving and on a path to sustained economic expansion in 2011, according to the Economic Advisory Committee of the American Bankers Association.

“The economy is transitioning from reliance on monetary and fiscal stimulus to a sustained expansion in the private sector. Businesses and consumers are feeling more confident about the economy, and job growth will accelerate as layoffs diminish and small business hiring picks up,” said Stuart G. Hoffman, acting committee chairman and chief economist of PNC Financial Services Group Inc.

The group expects private sector job growth will improve this year and accelerate toward the end of 2011, despite disappointing job creation in 2010.  The EAC foresees another 2.1 million new jobs in 2011, well beyond the 1.1 million new jobs the economy added in 2010 and an unemployment rate down close to nine percent by year end.


Consumer and business spending will pick up along with job growth, the EAC said.   Strong exports and capital expenditures will also continue to fuel the expansion, even as weak housing and state and local government financial difficulties restrain the pace of expansion.  With consumer spending strengthening, along with strong business capital equipment spending, the EAC expects real GDP to grow by 3.3 percent in 2011.

“There are still too many people unemployed and even growth in real GDP of 3.3 percent will take only a moderate bite out of the unemployment rate. Even stronger private-sector employment growth is needed if we are to achieve a self-sustaining economic expansion,” said Hoffman.

The EAC consensus is that while short-term interest rates will remain virtually unchanged, the 10-year Treasury note rate is expected to rise slightly from 3.3 percent to 3.7 percent by year end. The 30 year fixed mortgage rate is expected to rise from 4.8 percent to 5.3 percent by year end.

Join the Conversation (1)

see all

This is a professional community. Please use discretion when posting a comment.

  • An unemployment rate of 9% on 1/1/2012 will hardly be a mark of achievement especially with the level of “permanently unemployed” and part-time employees desiring full-time jobs not included in those numbers. There is also the question of the level of income the new jobs will generate. If the old jobs were at higher income levels, then the return of home values will take that much longer.

    This is a business recovery not a jobs recovery. The article seems more Pollyanna than a realistic prediction of the economic position of the US economy, particularly the home market.

    Last year there were cries about “do not listen to the bad news, those prognosticators have it wrong.” Or they try to turn it as “we get what we say.” Predictions which ignore actual market conditions are best described as wishes. Plans based on mere wishes were seen extensively in 2006-2008; look what they produced.

string(96) ""

Share your opinion

[wpli_login_link redirect=""]