U.S. GDP growth is expected to remain sluggish and the U.S. unemployment rate could tick up to a peak of 9.5% in the third quarter of 2012, according to Northern Trust’s first formal forecast of U.S. economic activity and interest rates for 2012. Northern Trust is a Chicago-based global investment firm with $684.1 billion in assets under management. The forecast was authored by Asrah Bangalore, vice president and economist.

Bangalore’s forecast for real GDP growth is only marginally better in 2012 vs. the forecast for 2011 – on a Q4/Q4 basis, 2.45% in 2012 vs. 2.20% in 2011. However, she does expect some forward momentum to build in the second half of 2012 with respect to real GDP growth, and that momentum should intensify in 2013. This is based on an expected resumption of quantitative easing (QE) by the Federal Reserve early in 2012 and/or a pick-up in bank credit creation.

Because the Northern Trust forecast is for below-potential real economic growth, the unemployment rate will creep up from its Q2:2011 average of 9.1%, peaking at 9.5% in Q3:2012. It will be 2013 before any sustained meaningful decline in the unemployment rate sets in.

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