Strong Lending Expected in 2015
Next year will bring relatively strong growth in gross domestic product, continued lower unemployment and an increase in wages, all of which should lead to a good year for making loans, the consumer finance site WalletHub forecasted.
The site consulted a group of five economists and professors for the forecasts.
WalletHub’s experts estimated the U.S. gross domestic product would reach 3% in 2014, mirroring the same prediction it made last year although the site acknowledged that its previous forecast might have been too conservative.
“I expect the U.S. economy to continue an upward recovery trajectory – slow and steady growth with maybe a hiccup or two just to keep everyone honest,” Richard Feinberg, professor of consumer science at Purdue University, told WalletHub.
“GDP growth will probably be between 2-4% unless there is some unanticipated geopolitical and/or geo-economic catastrophe,” he added.
Likewise, WalletHub anticipated unemployment would fall to at least 5%, if not lower, as the GDP rose.
“We expect a similarly impressive decrease in 2015, down to at least 5%, as the economy really gets rolling and unemployment figures continue to trend back toward pre-recession levels,” WalletHub estimated. “This might seem like a rather drastic call – with most organizations, including the Federal Reserve, foreseeing a dip down to the 5.4% [to] 5.6% range – but there are some compelling reasons to believe these estimates are overly conservative.”
For example, WalletHub said small business job growth has been largely absent from this economic recovery. The site speculated that unemployment will not fall in earnest until that growth occurs, which will likely be in 2015.
WalletHub also said the very low delinquency rate on credit card loans suggested more Americans are spending with their card while remaining current on their bills.
The site forecasted wages would also increase by an average of 3%.
“While the unemployment rate has been dropping steadily in recent months, and should continue to do so in 2015, we expect wage growth to largely hold steady in the New Year – ultimately reaching 3%, compared to the 2.9% average of the past two years,” WalletHub said.
“A lack of wage growth is one reason many people have questioned the strength of the economic recovery, or at least its equality, and it will continue to serve as an easily identifiable example of this country’s income divide moving forward,” the site noted.