A panel of economists on the Economic Advisory Committee of the American Bankers Association (ABA) is projecting that the U.S. economy will recover from the latest soft patch and pick up steam in the second half of 2011.

The committee predicts that inflation-adjusted GDP growth will increase to about 3% during the rest of the year and 2012.  Additionally, they expect that 2 million jobs will be created this year and 2.5 million jobs in 2012.

“Business growth has built up some staying power, despite continued head winds,” said Peter Hooper, committee chairman and chief economist of Deutsche Bank, New York. “Economic  recovery at an above-trend pace will support continuing recovery of jobs, but we have a long way to go to get back to where we were before the Great Recession.”

With nearly 9 million jobs lost in 2008 and 2009 and only 2 million regained thus far, the economists do see high unemployment taking some time to come down, forecasting a decline from 9.1% currently, to around 8% by the end of 2012.

Although the committee expects consumer activity to remain cautious, they indicate that business investment will fuel growth in 2012, with business investment expanding at twice the pace of the overall economy.

In terms of home prices, the economists expect weakness to extend into next year as home prices fall another 3% into mid-2012.  However, they expect the trend to reverse at that point as home building and sales begin to grow.

As economic growth takes hold, the group see interest rates and inflation beginning to inch upward, but expect the trends to be slow.  They suggest the Federal Reserve's target funds rate to move from the current 0.25% to 1% by the end of 2012. The rate on 30-year mortgages are projected to rise to 5.1% by the end of this year and 5.8% by the end of 2012.