While the economy remains under the influence of the COVID-19 pandemic, the nation’s top bank economists expect the U.S. economy in 2021 to see its strongest growth in about 20 years. The American Bankers Association’s Economic Advisory Committee—which is made up of 15 chief economists from some of the nation’s largest banks—today noted that it expects the economy to grow at a 4% rate this year, though growth is expected to be slow in the first quarter.
“The painful toll from COVID-19 continues to add up,” said EAC Chair Beata Caranci, chief economist at TD Bank Group. “In addition to rising hospitalizations and deaths, the pandemic is weighing on the U.S. economy as social distancing and business shutdowns in many states have slowed commerce considerably.” She added that economic growth should accelerate as the balance begins to shift from hospitalizations to vaccinations.
The committee said it expects little change in short-term interest rates in 2021 and projected that rates on longer-term U.S. Treasury securities and mortgage rates will rise modestly. The unemployment rate is projected to decline from December’s rate of 6.7% to 5.4% by the end of the year. “The pandemic has pushed many companies to be more efficient and that has accelerated trends in digitization and that in turn may reduce the speed in rehiring,” said Caranci.