The nation’s top bank economists forecast continued economic growth that would support job growth and wage gains in 2020 and beyond. The American Bankers Association’s Economic Advisory Committee—which is made up of 15 chief economists from some of the nation’s largest banks—noted that they expect 2020 GDP growth to moderate slightly to 1.9%.
“Sustained job gains, low unemployment and strong wage growth will enable consumers to continue supporting the economy, although less robustly than last year,” said EAC Chairman Catherine Mann, global chief economist at Citi. She added that the committee expected to see an uptick in business investment as firms invest in new technologies to increase efficiency and productivity in a tight labor market. On the consumer side, the committee expects personal consumption expenditure growth to moderate to just over 2%, down from 2.7% last year.
With respect to interest rates, the committee expects the federal funds rate to remain steady through 2021. There was less consensus among the group about the trajectory of interest rates in 2021, however, as members had differing views on the tightness of the labor market and how it would affect inflation. The committee projected continued growth in credit availability, though they were split on whether credit quality would remain the same or weaken slightly.
Mann is featured in a new bonus episode of the ABA Banking Journal Podcast where she discusses the EAC’s consensus forecast and economic issues likely to affect the banking industry over the next year. Click here to listen to the bonus episode.