Leading Economist, Steven Rick Shares Five Economic Indicators Every Credit Union Should Track

CUNA Mutual Logo3/19/2019

The year is off to a strong start, despite the trade wars and market roller coaster that ended 2018, as well as the partial government shutdown earlier this year. The U.S. economy continues to benefit from strong jobs numbers, low unemployment rates, and high consumer confidence.

In the Northwest, state economies in Idaho, Oregon, and Washington are following national trends. Statistics from the U.S. Department of Labor show all three states reporting significant annual employment gains (Table D) in January. A Bureau of Economic Analysis report showed a higher-than-average increase in personal consumption expenditures – an indicator of high consumer confidence – present in all three states for 2017, with Idaho leading at 6.9 percent, Oregon at 5.3 percent, and Washington at 6.1 percent.

Strategic Link Partner, CUNA Mutual Group’s Director and Chief Economist, Steven Rick, conducts strategic research, analysis, and forecasting of the financial services industry. As we monitor how the economy performs in 2019 and into 2020, Rick recommends watching these five key economic indicators that provide insight for credit unions in 2019:

  • Unemployment rate: A lower unemployment rate correlates with faster credit union loan growth and lower loan delinquency rates.
  • Vehicle sales: Credit union new auto lending volumes correlate to vehicle sales numbers, and manufacturing production and demand for such goods are vulnerable to the economic cycle.
  • Consumer confidence: When consumers feel optimistic about job security and the economy, they are more likely to take out a loan. The recent surge in consumer confidence over the past few years has been associated with double digit loan growth at credit unions.
  • Stock prices: Consumers tend to borrow and spend more during periods of rising stock prices. Recent volatility and declines in stock prices may reduce the growth rate in credit union loan balances outstanding in 2019.
  • Existing home sales and inventory of homes for sale: Existing home sales are a good gauge of consumer aggregate demand and their willingness to borrow. Rising mortgage interest rates and rising economic and policy uncertainty could reduce existing home sales and credit union mortgage lending in 2019.

Monitoring these economic turning points could change your long-term strategic planning. For more information about CUNA Mutual Group, contact VP of Strategic Resources, Jason Smith. To learn about Strategic Link’s partnership with CUNA Mutual Group, visit its webpage.