ANAHEIM HILLS, Calif.–Credit unions here were told the economy is growing at a slow-but-steady pace from 2017 – 2019, but the “interesting story” lies in the why, according to projections offered during the California and Nevada Credit Union Leagues’ Second Annual “Your Economy–Your Credit Union” event here.
According to the leagues, keynote speakers at the event said public policy, regulatory trends, financial markets, politics, and consumer-worker demographic shifts will all play a role in what the economy “looks like” over the next couple of years and how credit unions can adapt or stay nimble. “Barring a major unforeseen event, California and Nevada’s current economic growth spurts probably won’t run their course until sometime in 2020,” and the same holds true for the U.S. economy,” credit unions were told, according to the leagues. “Continued job growth will prop up overall economic growth as there is labor-market capacity available to be utilized.”
However, very early warning signs of the next recession may start showing up and are an opportunity for credit union leaders to stay alert, the meeting was also told.
“The sources of potential disruptions to the economy, or potential boosts for that matter, are at the federal level,” said Dwight Johnston, chief economist for the leagues. “The economy’s slow upward growth trend can survive without tax reform, but disappointment at the lack of progress in Congress could possibly erode business confidence.”
Interest rates are sending mixed messages, Johnston observed. He said they should remain historically low relatively speaking, but they’ll experience steady growth from now into 2019.
Yet, theoretically, rates could rise or fall—and there is the growing possibility of a flattening yield-curve in the bond market, Johnston added.
In addition to Johnston, other speakers sharing insight specifically tailored for credit unions’ upcoming strategic planning season were Rob Eyler, director of the Center for Regional Economic Analysis at Sonoma State University and board member for Redwood CU, and Bill Hampel, chief economist and chief policy officer at CUNA
According to the leagues, during the meeting credit unions were also told:
California Highlights
- California will face challenges as the cannabis industry goes “live.” The initial movements will be slow and small but will grow over the long term
- California’s continued rising home prices (and tenant rental rates) will constrain credit union members’ affordability when it comes to their cost of living
- The California economy and job market was outperforming the rest of the nation over the past two years, but the state will slow down this year. Should President Donald Trump decide to take a hardline approach to trade and travel restrictions, the risks are elevated in California in the trade, agriculture and leisure sectors
Nevada Highlights
- The Nevada economy will continue its slow, steady pace of improvement, and the growth of credit unions loans reflects that
- In general, Nevada is making some strides to diversify the economy and become less dependent on the travel and leisure sectors. But that will be a long-term process. As long as the U.S. economy stays on a slow-but-steady growth path, Nevada will follow suit
- Nevada’s largest challenge is spurring growth that is fundamental and not as tied to tourism, but instead linked to economic diversity