WASHINGTON A group of top bank economists on Wednesday predicted that a recession is unlikely this year and said that despite an expected tightening of lending standards, fears of a credit crunch are unfounded.
Though the latest semiannual forecast by the American Bankers Association Economic Advisory Committee anticipated a decline in credit quality and a slight drop in credit availability, it said that declines in borrower qualifications were not steep enough to justify comparison to serious crises of the past.
We see the same direction but not the same magnitude, said Comerica Bank senior vice president and chief economist David L. Littman, who is chairman of the committee.
The committee also called on the Federal Reserve Board to slash interest rates. The Federal Reserves recent rate cut was a good start, Mr. Littman said. Two or three more cuts by midyear will help to stabilize and then boost the pace of economic activity.