Release Date: June 19, 2012
Contact: Andrew DeSouza, 202.962.7390, [email protected]
SIFMA Releases 2012, 2013 Economic Forecast
Washington, D.C., June 19, 2012-SIFMA's Economic Advisory
Roundtable today released its economic outlook
for the second half of 2012 and predictions for 2013,
forecasting that the economy will grow at a rate of 2.1
percent in full-year 2012 and 2.1 percent in 2013.
"Our Roundtable maintains their forecast for moderate
economic growth for 2012 and 2013, but warns about a number
of headwinds that could affect that forecast," said Kyle
Brandon, managing director and director of research at
SIFMA. "Concerns over the European debt crisis, the
so-called "fiscal cliff" and regulatory uncertainty remain
significant risks to the downside for the economy going
The median forecast called for gross domestic product (GDP)
to rise 2.1 percent in 2012 on a year-over-year basis, and
by 2.2 percent on a fourth quarter-to-fourth quarter basis.
For 2013, the median forecast was 2.1 percent
year-over-year; on a quarterly basis, the GDP growth rate
was expected to fall in the first quarter of 2013 to an
annualized 1.8 percent and rise to 2.3 percent in the
Unemployment was expected to remain at elevated levels
throughout 2012 and 2013, with levels on pace with those
forecasted in the end-year 2011 report. Survey respondents
expected the full-year average unemployment rate to drop
slightly to 8.1 percent in 2012 (compared to 8.2 percent
forecasted in the end-year 2011 report), declining to 7.8
percent in 2013.
Monetary Policy and Quantitative Easing
The Roundtable was unanimous in its opinion that the FOMC
would not change its current 0.0 to 0.25 percent target
federal funds rate range through 2013. Of those respondents
that put a date to a rate hike, approximately half expected
a rate hike in mid- to late-2014.
On the possibility of another round of quantitative easing
by the Federal Reserve, the majority of respondents (65
percent) expected the Fed to conduct further quantitative
easing (QE3). When asked what conditions would trigger
further easing, respondents were generally in agreement
that subpar GDP and weak job growth, rising deflationary
risks, and potential contagion from Europe were likely
primary triggers for a third round of quantitative
The timing for QE3 was expected to be near-term, with
nearly all respondents who anticipated further quantitative
easing expecting an announcement at the June 20, 2012 FOMC
meeting and action to be taken from June to September 2012.
While a majority of respondents that anticipated QE3 expect
the Fed to act through purchases of long-term securities
such as Treasuries and agency mortgage-backed securities
(MBS), a small minority (17 percent) expect the extension
of 'Operation Twist' instead.
Falling Off a "Fiscal Cliff"?
All survey respondents opined that some attempt would be
made by Congress to mitigate the "fiscal cliff", with the
majority expecting a temporary extension of the Bush era
tax cuts. A few respondents expected either reductions in,
or the outright elimination of, sequestering as well.
Survey respondents also commented that most, if not all
four aspects of the "fiscal cliff" (expiring tax cuts, the
debt ceiling, appropriations and sequestration) will be
postponed. Respondents generally expected some form of a
budget plan, similar to the framework put forth by
Bowles-Simpson, or a gradual phase in of fiscal cuts.
Respondents predicted that congressional action is highly
dependent on the November elections, and that the only
action they might take is a short term postponement. Nearly
all respondents opined that uncertainty over fiscal policy
will continue to negatively impact GDP growth in 2013,
split fairly evenly between those expecting a negative
impact of up to 100 basis points and those expecting a
negative impact of over 100 bps.
The full report can be found at the following link:
The Securities Industry and Financial Markets Association
(SIFMA) brings together the shared interests of hundreds of
securities firms, banks and asset managers. SIFMA's
mission is to support a strong financial industry, investor
opportunity, capital formation, job creation and economic
growth, while building trust and confidence in the
financial markets. SIFMA, with offices in New York and
Washington, D.C., is the U.S. regional member of the Global
Financial Markets Association (GFMA). For more information,