ABA committee cites resilient economy in updated forecast

Economists at some of North America’s largest banks cited resilience in the economy, saying they expected a “solid pace” of growth throughout 2026 and into 2027..“A soft landing is in play” despite persistent inflation, said Beth Ann Bovino, chair of the American Bankers Association’s Economic Advisory Committee.The committee projects GDP growth of 2.7 percent in the third quarter, 2.2 percent in the fourth quarter and 2.2 percent in 2027. Citing steady consumer spending, a balanced labor market and strong business investment, particularly in data centers and related equipment, the committee said the economy is “resilient enough to withstand underlying inflation pressure.”Inflation should moderate over the duration of the forecast but remain above the Federal Reserve’s 2-percent target. Bovino said she expects inflation of 3 percent or higher for the rest of this year. As such, the committee anticipated another federal funds rate hike in 2026 but projected the Fed to hold off on rate increases next year while acknowledging that inflation’s persistence raises the likelihood of further action. Bovino said bankers expected this month’s rate hike and probably won’t be surprised if the Fed raises rates again this year.“Bankers are aware and managing risk,” she said. “I don’t see two rate hikes upsetting the apple cart.”Bovino is U.S. Bank’s chief economist. Her colleagues on the ABA committee include economists from BMO, Bank of America, Citibank, Deutsche Bank, JPMorgan Chase, Huntington Bank, TD Bank, Wells Fargo and several others.