SIFMA Sees Real GDP Growth in 2010
[Update 1] The Securities Industry and Financial Markets Association (SIFMA) correctly predicted the Federal Open Market Committee (FOMC) meeting today would conclude with no change to the 0-0.25% range for the federal funds rate set by the Federal Reserve. The FOMC also notes subdued levels of inflation and slower overall economic contraction since its last meeting in April, while SIFMA sees as much recovery as growth in real gross domestic product (GDP) next year, but not before the extent of the economic downturn unwinds in 2009. “The general consensus of the Roundtable is that the US economy will turn positive in the third quarter, although remain at a subpar pace until next spring,” said Kyle Brandon, managing director of research for SIFMA, in a statement. The roundtable members, influential members of major banking and financial firms, projected a median -2.7% growth in real gross domestic product in 2009 on a year-over-year basis, and a 2.9% recovery growth in real GDP in 2010 on a year-over-year basis, although this growth next year is not expected to keep unemployment from moving higher. “The US economy remains afloat, although battered, with the passing of the financial market meltdown and the credit market freeze," Brandon added. "This cautiously optimistic outlook is a result of the aggressive and unconventional central bank actions and the fiscal stimulus, which have somewhat alleviated the continuing housing sector weakness, tight credit markets, and widespread economic contraction.” Most of the round table participants -- 85% -- viewed the current housing market and growing unemployment as having a negative influence on the broader economy. An 80% majority viewed fiscal policy as the only positive factor. “[W]ithout fiscal stimulus, there would be no recovery," said one member in the outlook report. "The biggest risk in 2010 is the consumer’s ability to start taking the weight of the economy off the government.” Write to Diana Golobay.