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Economy remains sluggish Hampel tells league
PINEHURST, N.C. (6/17/09)--While the worst of the recession is behind the nation, the economic recovery will be slow and weak, Bill Hampel, chief economist for the Credit Union National Association, told attendees at the North Carolina Credit Union League annual meeting last week in Pinehurst. The economy will likely turn around in the third or fourth quarter this year, but growth will not be as robust as the country experienced in the first half of this decade because “consumers’ balance sheets are in really lousy condition,” Hampel told the league (Weekly Update June 15). “Consumers have been doing a lot of borrowing recently and it will take them a while to work that off,” he added. “We’re looking at a long and pretty weak recovery, but at least it’s a recovery, which is better than we’d had for the past six months.” Concerning national foreclosure trends and how they affect credit unions, Hampel said most foreclosures have occurred in areas that have seen the biggest price run-ups and consequently the biggest price corrections--Arizona, California, Florida and Nevada. Four to five years ago, credit unions did not see foreclosures. However, they are seeing them now, even though at a very low loss rate, compared with most other lending, he said. “When homeowners get into difficulty, they are not defending their homes as vigorously as they did in the past,” Hampel explained. “That’s why we’re seeing more loan losses.” Hampel also discussed loan growth for credit unions over the past year. “Usually when the economy turns south, borrowing slows down too,” he said. “But even though last year was an unusual year for the economy, credit union lending actually rose because other lenders that members go to were in such bad shape that they cut back lending completely.” Therefore, even though credit union members were borrowing less, credit unions got more of the lending business. That trend is likely to continue this year, Hampel said. To see a video of Hampel’s comments, use the resource link.
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