Business lending will rise by 10 percent this year, 15 major bank economists predict.

THE U.S. ECONOMY WILL GROW nearly 3 percent on an inflation-adjusted basis this year compared to 2.5 percent last year, according to the Economic Advisory Committee of ABA.

The committee, which includes 15 chief economists from among the largest banks in North America, sees an improved fundamental backdrop for growth. Sectors that were severely damaged during the 2008-2009 crisis have healed significantly. In particular, the banking and real estate sectors are in much better health. Household balance sheets have also improved, with strong gains in asset prices and a dramatic drop in debt service burden.

The fiscal and monetary policy environment is supportive of growth. Fiscal policy is no longer a headwind as budget brinkmanship battles abate and tax and spending policies stabilize. The group forecasts the federal budget deficit will stabilize at $470 billion in fiscal year 2015.

The committee expects the Federal Reserve to maintain near-zero interest rates through mid-2015. Thereafter, the bank economists see a very gradual normalization of interest rates over the next several years.

"We expect the Fed to calibrate its policy to minimize any shock to growth," says Ethan Harris, chairman of the group and co-head of global economics research at Bank of America Merrill Lynch.

The group forecasts that consumer credit growth will be modest this year and business lending growth will be stronger, but will return to a more normal pace of growth. In 2015 and 2016, loans to individuals are expected to grow about 6 percent and loans to businesses will grow about 10 percent.

"We're optimistic that business lending will grow at a double-digit rate this year to finance healthy business investment," says Harris. "Stronger growth in business lending will be critical for the economy. Banks are ready to meet demand as businesses take the next step forward."

The group sees...