WASHINGTON (11/16/09)--The economic “freefall” has ended, and the economy should likely grow at a rate of 2% during the upcoming year, Credit Union National Association chief economist Bill Hampel told attendees of the American Association of Credit Union Leagues (AACUL) annual meeting in Naples, Fl. While these are relatively positive developments, Hampel said that it will be “a long and slow recovery because the household sector’s balance sheet is still in lousy shape.” Unemployment will likely get close to 11% in the first half of 2010 before backing down, Hampel predicted. “It’s a lagging indicator; people won’t accept that the recession is over until they see lower unemployment, which means credit union members will act like they are in a recession till then,” he added. The bottom line, Hampel said, is to expect a “fragile, low-growth economy,” with the possibility of a fall back into recession not out of the question if there is another economic shock. As a result, credit unions should expect to experience faster savings growth and weaker loan growth. However, Hampel sees lending opportunities for credit unions, as most of them currently “have a fairly low share of their members’ loan business.” “The competition—other lenders—are hurting more than we are. There are opportunities for CUs to pick up share.” Hampel forecasted a 7% credit union loan growth next year and a delinquency rate of 1.5%. He also expects an inflation rate of 1.5% to 2% in the year ahead and no appreciable increase in short-term interest rates until after the unemployment rate begins to fall in the second half of 2010. In other sessions:
* Dave Adams, president of the Michigan league, discussed how consolidation and collaboration of best practices on the business side can further strengthen leagues. He suggested a model that would bring businesses together, share stock ownership, and allow any participating states to operate the businesses under a common brand. The result, he said, would be less fragmentation and greater perceived value from leagues’ member credit unions; * Political consultant Michael Hook and pollster Keith Frederick said the 2010 political environment bodes well for credit unions. Hook underscored credit unions' locally based "boots on the ground" grassroots strength as particularly resonant in an election year. Frederick noted polls showing people angry over feeling "gamed" by Wall Street. "Credit unions have the opportunity to say ‘we are an institution of the people, we didn’t cause the problem, when credit gets tight, we’re there for you.’ It is a great educational opportunity"; * Holly Herman, president of CU Retire Execs, outlined CURE’s free, confidential advising service that taps the expertise of retired CU executives for the benefit of the CU system. She asked leagues to help spread the word about the program; * Successful fundraising strategies for Children’s Miracle Network’s Credit Unions for Kids program were shared by the CEOs of the California/Nevada leagues, the Maryland/DC leagues, the Arizona league and the Nebraska league; * Three leagues—Georgia, Missouri and Iowa--shared successful models they have used for how they handle compliance services; and * Mike Beall, president of the Maryland/DC Credit Union Association, gave leagues an advance on the potential for leagues and CUs to participate in "Bank On (City Name)," a series of coming partnerships spearheaded by the National League of Cities with financial institutions to help unbanked consumers.
(See related stories: Matz to AACUL: NCUA to help CUs manage higher risk,'REAL Solutions' program getting results, with state league help, League leaders give political pointers at AACUL meeting. And in CU System: Wisconsin league president elected AACUL chairman.)