Economic Forecast for 2011-Business Loans
Posted by Bill McDermott on Mon, Feb 14, 2011 @ 11:39 AM
Many business owners are looking for an economic forecast for 2011. What are interest rates going to do on my business loans? Is now a good time to get that SBA loan? What are mortgage rates going to do this year? Here are some comments from the press conference of the American Bankers Association Economic Advisory Committee (EAC) last month.
"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.
Private sector job growth will improve this year and accelerate toward the end of 2011. While total job creation was disappointing in 2010, the economy did experience 12 straight months of private-sector job growth.The EAC foresees another 2.1 million new jobs in 2011, well beyond the 1.1 million new jobs the economy added in 2010.
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.
"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 predicts that in 2011, loans to consumers will expand by 2.7 percent and loans to businesses will grow by 4.3 percent. "Bank lending is growing and will help finance the 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.
For more information, click on the link below
Sustained Economic Expansion