WASHINGTON–A CUNA economist is forecasting continued declines in the unemployment rate and ongoing economic recovery. As for fears of a housing bubble, there isn’t one, CUNA said.
CUNA Senior Economist Jordan van Rijn noted that while some have expressed disappointment in the pace of new hiring, the trade group expects unemployment rates to continue to fall to an estimated 5% by the end of 2021 and 4% by the end of 2022, which CUNA dubbed a “relatively fast” economic rebound.
According to van Rijn, factors restraining job creation include:
- Continued fear over contracting COVID-19
- Supply chain challenges
- Competition between employers and extended unemployment benefits
The current economic recovery from the pandemic does include some unique aspects, van Rijn said. Among the unique factors cited by van Rijn:
- Median existing home prices rose 23.6% since 2020, hitting a record high in May
- Homeowners don’t appear to be underwater.
- The shift in consumer preference to larger homes and away from cities is making it difficult for first time, low-, and middle-income buyers to find an affordable home.
Not a Bubble
“We often get asked if we are in a housing bubble, but that is not necessarily the case,” van Rijn said. “There are structural factors at play, such as lower supply of existing homes, a shortage of materials and labor, and higher cost in materials.”
CUNA economists said they expect relatively strong earnings at credit unions of 85 basis points by the end of 2021 and into 2022 as the economy recovers and consumers become more confident spending and borrowing again.
“Credit union earnings were very strong in Q1, standing at 1.04%. This has really been driven by large credit unions (over $1B in assets) that pulled back on loan loss allowances,” van Rijn said.