Thirteen chief economists from the largest North American banks recently forecast strong economic growth in 2014 amid increased private-sector demand and less fiscal drag.
The American Bankers Association’s Economic Advisory Committee estimated that GDP growth will hit three percent in 2014, compared to 2.3 percent in 2009 and a post-recession high of 2.8 percent in 2010.
“This will be the strongest economic growth since the expansion began in 2009, and the committee’s strongest forecast since 2005,” Christopher Low, the chairman of the group and chief economist of First Horizon National Corp’s FTN Financial, said. “We expect faster growth in business investment and stronger job creation as the economy improves.”
According to the committee, the housing market will continue to grow over the coming year as wages rise, unemployment continues to decrease and home sales recover from the market collapse. The committee forecast a 12.3 percent increase in home prices in 2014, which may bolster consumer spending.
“When families get into new homes, they spend more on appliances, furniture, electronics and building materials,” Low said. “Consumers are also finding themselves on stronger financial footing in the New Year and have regained confidence. The group believes consumer spending will support economic growth over the year ahead. Automobile sales are also expected to remain strong.”
Low said that though some consumers remain cautious as a result of lingering unemployment and sluggish wage growth, tax rates will not rise as much in 2014.
“The consumer is the key; if people loosen up their wallets and pocketbooks, economic growth will be even stronger,” Low said.