The U.S. economy is likely to rebound from its dismal first-quarter performance, economists for top banks projected Tuesday.
After shrinking at a 0.7 percent seasonally adjusted clip in the first quarter, gross domestic product will grow at a 2.3 percent rate in the second, 16 economists with large banks estimated. Total inflation-adjusted growth for 2015 will come in at 1.8 percent, they projected, a figure that reflects the contraction in the winter.
The projection comes from the Economic Advisory Committee of the American Bankers Association, a trade group for banks. The committee includes chief economists for Bank of America Merrill Lynch, JPMorgan Chase, Comerica Bank and others.
Speaking at a press conference at the American Bankers Association in Washington, the committee’s chairman, Ethan Harris, expressed optimism that the weak first quarter would prove to be a temporary soft patch and for job creation to hold up throughout the rest of the year.
Despite headwinds to the U.S. generated by the strong dollar, the committee cited supportive monetary and fiscal policies, low oil prices and easing credit conditions as reasons for optimism.
The committee predicts that job creation will average 200,000 a month for the rest of the year, with the unemployment rate falling to 5 percent by the end of the year, from 5.4 percent currently.
That, in turn, will lead to a recovery in wages for workers, Harris said.
The economy is on the “cusp of, or beginning of, a recovery in wages,” Harris said, calling it the “final phase in the business cycle.”
The committee sees growth picking up to 2.6 percent in 2016. That would be toward the high end of the projections issued by members of the Federal Reserve in March.
The bank economists also project that inflation will rise throughout the year to average 2 percent in 2016 in the measure preferred by the Fed, which targets 2 percent inflation in the long run.
