By Frank J. Diekmann
No true credit unionist ever forgets when they were a wee lass or lad and went away to Camp Credit Union, where they would gather under the stars at night next to a glowing cooperative campfire before there would be a hush, and a wizened camp counselor in an Ed Filene replica fedora would share the CU genesis story of the New Hampshire mill workers and the formation of the first credit union.
Later, before drifting off to sleep in your Pierre Jay jammies and cozy cabin bunk illuminated by seven flickering Cooperative Principles nightlights, you would replace your Hail Mary with a St. Mary’s, dozing into a slumber made comfortable by knowing these lower-working class workers—many of them French-speaking immigrants—had created a refuge for themselves, their finances, and their own dreams.
But here’s the thing. There’s no “The End” on that story, and the story isn’t just limited to a display at America’s Credit Union Museum in Manchester. It’s a living story that adds new chapters every year—all credit unions need to do is write them.
So, get out your pens or tablets (depending on when you were at Camp Credit Union), because if you haven’t noticed, there are clearly new chapters waiting to be written. If good news comes in threes, then in this case the “opportunities” have come in fours, as these stories reported by CUToday.info last week illustrate. The mills may have closed, but the workers and their challenges remain.
Declining Grades
First, CUNA Mutual Group released a survey that found middle-class Americans are less optimistic about their ability to achieve upward mobility than they were six months ago. When CUNA Mutual first polled the middle class in the Fall of 2018, survey respondents gave themselves a “B minus” when asked to evaluate their prospects for achieving the “American Dream.” Now, that grade has dropped to a “C.”
What’s causing the anxiety? For many, it’s fear the other shoe will drop after several years of strong economic growth. Close to 50% of respondents expressed worry the U.S. will enter a recession in the next year.
Of the respondents who said they are confident in their personal economic position, two-thirds are only “somewhat” confident, meaning they can comfortably pay their bills, but want to save more in the long run, CUNA Mutual Group said.
Wake-Up Call
“This should be a wake-up call to families to start shoring up their finances now, whether that takes the form of cutting spending, reassessing their savings to avoid having to cut into their retirement to stay afloat, or even refinancing a mortgage if that’ll put them in a better position,” said Steve Rick, chief economist with CUNA Mutual. “If there’s one thing 2008 taught us, it’s that you can’t afford to be caught on your heels if a recession hits.”
One specific finding worthy of note: Women are less bullish about their personal economic situation, with 54% saying they feel somewhat or very confident about their economic position, versus 68% of men.
Dream Fades Further
The same week CUToday.info was reporting CUNA Mutual’s findings, real estate firm Clever released a new analysis based on Census data from 1960 to 2017 that includes home prices, rents, and household income.
“After adjusting for inflation over time, the future of the American Dream seems rather gloomy: Median home prices increased 121% nationwide since 1960, but median household income only increased 29%,” Clever stated.
And it seems cracks in the American Dream are extending further, with Clever adding, “Home buyers aren’t the only ones struggling. Median gross rent increased by 72% since the 1960s, more than twice the growth seen by adjusted incomes, making renting costlier than ever and saving for a future home difficult.
The company said it found home prices in the West are increasingly out of line with household income (saying in many western markets homes are “unobtainable,”) while only 16 out of the 100 most populated areas in the U.S. are below the healthy 2.6 price-to-income ratio.
You can read the full findings here.
Revolving & Revolving
The third piece of analysis released last week that only made it clearer the mill (and retail/factory/service industry/etc.) workers of the 21stcentury need their credit unions came courtesy of the CFPB, which released research showing two-thirds of actively used credit card accounts don't pay off the full balance at the end of the billing cycle. Those accounts that carry a revolving balance do so continuously for 10 months on average; 15% revolve continuously for two years or more, the report found.
The CFPB further found approximately26-million Americans are "credit invisible" because they do not have a credit record.
Collectors Are Busy
A final report published last week also came out of the CFPB, which found more than one-in-four consumers with a credit report have at least one debt in collection by third-party debt collector.
The study also found that more than three-out-of-four third-party collections tradelines are for non-financial debt. More than half (58%) of these tradelines are for medical debt and another 20% for telecommunications or utilities debt. Positive payment information is generally not furnished for medical or telecommunications debt, the CFPB said.
This is telling: there are about 5,500 credit unions in the United States, but there are approximately 9,330 debt collectors and debt buyers in the country.
So, should you find yourself back at Camp Credit Union this summer as maybe you drop off our own kids, when everyone is gathered around the campfire and roasting marshmallows don’t forget to update the story for the new campers, as it seems there’s a lot s’more work to be done, help provided, and dreams restored.
Frank J. Diekmann is Cooperator in Chief at CUToday.info and can be reached at Frank@CUToday.infoor @FrankCUToday.