Company: CMA
Filing Date: 2025-04-30
Form Type: 10-Q
Source: 0000028412-25-000154
Chunk: 207

Company: COMERICA INC
Filing Date: 2025-04-30
Form: 10-Q
Item: Part I, Item 8
Chunk 207
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 at March 31, 2025 was higher than at December 31, 2024, as evidenced by a higher level of stress in the downward economic scenarios. Uncertainties considered by management have broad implications for the overall economy and include the impacts of potential tariffs, persistent inflation and the fiscal deficit, amongst other risks.

The economic forecasts informing the current expected credit loss (CECL) model reflected increased uncertainty amid rapid changes in domestic and foreign economic policies. The impact of potential tariffs and changes to federal government operations were still unclear, creating challenges to economic forecasting. The FRB was assumed to gradually lower interest rates as they remain vigilant toward inflation. Consumer spending growth was seen moderating amid slower, albeit continued, growth of the real economy. Inflation was anticipated to gradually moderate as a modest margin of slack capacity opens in the labor market. Energy prices were projected to level off despite continued crosswinds from the Russia-Ukraine and Middle East wars, with U.S. crude production holding near a record high. Residential real estate property prices were expected to rise at more moderate rates, while commercial real estate prices faced headwinds, both of which reflected the long and variable lags through which the FRB's tighter monetary policy prior to the beginning of rate cuts in the third quarter of 2024 affected the real economy.

Downside risks to growth from trade conflicts, cost-of-living pressures on household finances and less expansionary fiscal policy were projected to collectively contribute to slower growth in 2025 and 2026. Reduced demand for office space and subdued economic activity in the central business districts of major metro areas are also expected to persist as drags on the broader economy. The FRB's gradual rate cuts driven by a softening labor market and expectations of disinflation would aim to contain the risk of recession.

These factors shaped the 2-year reasonable and supportable forecasts used by the Corporation in its CECL estimate at March 31, 2025. The U.S. economy was projected to grow at a below-trend rate through 2025 and 2026, before gradually normalizing to its trend growth rate. The unemployment rate was expected to hold below 5 percent, while interest rate forecasts reflected market expectations and guidance from the FRB available during the first quarter of 2025. The following table summarizes select variables representative of the economic forecasts used to develop the CECL estimate at March 31, 2025.

Economic VariableBase ForecastReal GDP growthGrowth improves unevenly through the forecast period to 2