Bank Economists See Improving U.S. Economic and Employment Growth
Economic activity will pick up in the second half of this year from the current soft patch, according to the American Bankers Association’s Economic Advisory Committee, which issued its consensus forecast in June.
The group, which includes a dozen chief economists from the largest banks across the country, predicts that inflation-adjusted GDP growth will rise to near 3 percent in the second half of this year and during 2012.
“Business growth has built up some staying power, despite continued head winds,” said Peter Hooper, committee chairman and chief economist of Deutsche Bank, New York. “Economic recovery at an above-trend pace will support continuing recovery of jobs, but we have a long way to go to get back to where we were before the Great Recession.”
According to the committee, more than 2 million jobs will be created this year – more than twice as many as last year. And next year, it will be 2.5 million.
However, with nearly 9 million jobs lost in 2008-2009, and less than 2 million regained so far, the bank economists see high unemployment lingering yet trending down. The group forecast is for the national unemployment rate to decline from 9.1 percent in May to a bit under 8 percent by the end of next year.
The bank economists see businesses leading growth, while consumers remain cautious. Business investment is expected to grow at twice the pace of the overall economy this year and accelerate in 2012. On the other hand, the committee sees real consumer spending growing around 2.5 percent this year and next.
“The high price of food and gas is eating into discretionary spending and the termination of the payroll tax cuts next year won’t help,” said Hooper. “Moreover, lingering high unemployment and further weakness in home prices will add to consumer caution.”
In addition, the committee expects the housing sector to remain weak into next year. The bank economists see home prices falling another 3 percentage points before bottoming by mid-2012. At that point, however, the committee foresees that home building and sales will start to grow and begin to contribute positively to the economy.
Low interest rates and strengthening credit will support growth, according to the committee. For consumer credit, and even more so for business credit, the committee foresees steady reduction in delinquencies and strengthening of credit growth into 2012. The committee forecasts consumer loans to grow at 3.9 percent and business loans to grow at 6.1 percent in 2012.
“Even with overall inflation somewhat elevated currently, core inflation is expected to be tame – below 2 percent – through 2012. Absent inflationary pressures, the Fed will hold back on raising interest rates until next year,” said Hooper.
The committee forecast is that the Fed will not raise the federal funds target rate from the current 0.25 percent ceiling until the second quarter of next year, with the target rate moving above 1 percent by year-end 2012.
“As economic growth solidifies, the Fed will want to stay ahead of the inflation curve by gradually pushing rates up.”
Low inflation and Fed restraint will keep interest rates down in general, according to the committee. The forecast for 3-month Treasury bills is to hold near 0.1 percent through this year. The 10-year Treasury note and 30-year mortgage rates are expected to rise to 3.6 percent and 5.1 percent (respectively) by year-end. As the Fed begins to tighten monetary policy, interest rates will move higher. Treasury bills will rise to 1.3 percent, 10-year Treasuries will rise to 4.3 percent, and 30-year mortgages will rise to 5.8 percent by year-end 2012.
“With the Fed moving slowly and credit quality steadily improving, bank lending will support economic recovery,” said Hooper.
Financial Safety Tips to Combat Identity Theft and Financial Scams
Financial safety starts with you. Having the tools and knowledge to protect yourself can prevent identity theft and give you peace of mind. Protect yourself and your financial information with these safety tips:
- Be on alert for emails or phone calls that ask you to “verify” or “reactivate” your account information. Your bank already has your account information, so we’ll never ask you in an email or on the phone to provide us with information we already have. If in doubt, delete the email (or hang up) and immediately call the bank to report your experience.
- Never write your PIN number on the back of your ATM card or disclose your PIN to anyone.
- Don’t leave receipts at the ATM. They often contain information crooks could use.
- Some customers have reported suspicious emails from ACH, NACHA or the Federal Reserve. The subject line may be: Wire Transfer or something similar. The email states that a wire transfer you initiated has not been processed and provides a link for more information. Do NOT click on the link, and delete the email from your Inbox.
Sample of this type of email:
- Sometimes suspicious emails are sent from an email address of someone that you know. Even when you recognize the sender, this may likely still be a spoof email sent by a malicious virus. If the body of the email sounds unusual and includes links, DO NOT click on any of the links. Notify the sender of the email that their inbox may have a virus and delete the email immediately.
Sample of this type of email:
Remember: NEVER give out account or card information over the phone, unless you have initiated the call to a known published number. Also, please notify us if you receive any suspicious calls, emails or text messages that relate to your financial information or account. Your financial security is our highest priority.
FSB raises money for the American Red Cross ‘Japan Earthquake and Pacific Tsunami’ Fund
Employees at First State Bank of St. Charles raised hundreds of dollars for the American Red Cross ‘Japan Earthquake and Pacific Tsunami’ Fund by making personal donations to that fund shortly after the earthquake and tsunami hit the east coast of Japan.
This 9.0-magnitude earthquake hit the East coast of Honshu Japan on Friday, March 11, 2011. The earthquake left five million households without electricity and 1 million without water. Early assessments indicated that more than 2,500 houses had collapsed completely, with 2,500 more damaged. The earthquake reached 1,300 miles of coastline.
Monies collected will go directly to helping provide relief to the areas effect by this natural disaster. American Red Cross provides shelters, food, emotional support and survival skill training for the victims of this disaster. First State Bank of St. Charles was honored to have been a part of this worthy relief effort.
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To report a lost or stolen Debit or ATM card during normal banking hours, please call 636-940-5555. If it is after hours, call 800-554-8969 and then call the bank on the following business day to order a replacement card.
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