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Economy Will Improve With Home Sales, Starts: ABA

Eleven chief economists forecasted Friday that the U.S. economy will continue to improve modestly as job growth steadies, along with easing declines in home prices, sales, and starts.

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The 11 economists ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô all from banks and members of the ""American Bankers Association's"":http://www.aba.com/default.htm (ABA) economic advisory committee ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô said that GDP growth rose to 2.5 percent by yearend 2011, and will likely chart the same course this year.

The committee said housing price declines continue to stagger along, a helpful sign even while foreclosures may see resurgence, and that home sales and starts could catch an upward draft seen in 2011 that lasts this year.

""Record affordability has made buying a home an attractive

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proposition, and should help increase demand,"" ""George Mokrzan"":George Mokrzan, committee chairman and chief economist for ""Huntington Bank"":https://www.huntington.com/free/?roi_source=ppc, said in a statement.

The economy is gaining momentum, with strong capital expenditures from businesses and moderate consumer spending setting the stage for sustained growth,"" he added.

The economists forecast a jump in consumer spending that runs anywhere from 2 percent to 2.6 percent each quarter, while low interest rates and stronger credit will assist business growth around the year.

Economic growth and business investments will help keep a heel to inflation. The Fed's historically low interest rates could also drive mortgage rates back to 4.3 percent, a difference from the past five consecutive months in which rates remained below 4 percent.

""Banks are increasing lending to borrowers, which will continue to support the economic expansion,"" Mokrzan added.

As for the peril? The ABA's committee warned of risks from public debt, which towers above $14 trillion in the United States and may lead to sovereign defaults for countries in the euro zone.

""Europe will likely experience a mild recession this year, which will slow U.S. exports, but will not dramatically affect our economy unless Europe's financial challenges become much more severe,"" he said.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.
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