WASHINGTON — Though credit availability is expected to pick up this year, it will be a slow improvement, a group of senior bank economists said Friday.

At the unveiling of their 2010 economic outlook, members of the American Bankers Association's Economic Advisory Committee said consumer and business lending will recover when other economic factors also show more strength.

"Consumers are still retrenching to some extent — paying down debts — and small businesses as well are very conservative and reluctant to take on more debt at this point," Scott Anderson, a senior economist at Wells Fargo & Co., said in an interview.

Anderson said he expects improvement, "but it's just going to take some time for that to happen."

The group predicted 3.1% growth in the gross domestic product. That would be an improvement of 3.4 percentage points over 2009 but much more modest growth than the 6% that has followed previous recessions.

"I refer to it or characterize it on my own as a 'half-speed' economic recovery," said Stuart Hoffman, the committee's chairman and the chief economist at PNC Financial Services Group Inc. He referred to "constraining factors," such as continued problems in commercial real estate and a lack of confidence in consumer spending, as holding back growth.

The group projected 3.2% growth in consumer credit, compared with negative-3.7% in 2009. It said the delinquency rate would fall 50 basis points, to 4.2%, and the chargeoff rate would fall 30 basis points, to 4.7%.

Other predictions included an increase in the federal funds rate to as high as 0.65% by the fourth quarter, and conventional mortgage rates going as high as 6.15%, compared with 4.93% in the fourth quarter of 2009.

Though Hoffman said delinquencies will improve "modestly" in 2010, members of the committee agreed that bad loans will remain a problem given persistent job losses.

Anderson said: "All of us thought you might see some further rise in delinquencies, and foreclosures could certainly move up a little bit from these levels. I think that's really tied closely to the unemployment rate."

Small-business lending, which has suffered from low demand, could still face challenges, committee members said. Credit availability will improve after companies feel more optimistic about the broader economy and their finances improve enough that they meet the banks' criteria, the economists said.

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