| Credit unions can expect to see another year of double digit loan growth, which would be the fourth consecutive year credit unions have seen loan growth over 10 percent.
That is what Mike Schenk, the vice president of research and policy analysis at the Credit Union National Association, said at Monday’s Government Affairs Conference hosted by CUNA, according to the Credit Union Times.
“We won’t see a huge increase in inflation being driven by low levels of unemployment and rising wages,” Schenk said, according to the Credit Union Times. “The way to get at that is that we look at the difference between the 10-year Treasury yield minus the TIPS (treasury inflation protected securities) yield, and that is suggesting at the moment that over the next 10 years people that are buying and selling securities essentially believe that the inflation rate will average 2.1 percent.”
Schenk has held this belief since last November when he wrote a post on CUNA’s website saying that strong loan growth in 2018 would likely derive from a strong outlook on jobs and household income, healthy consumer balance sheets, pent-up demand and affordable credit.
According to Schenk, most economists believe labor markets are now near full employment, with the Bureau of Labor Statistics data showing that the total number of job openings nationally is at an all-time high.
In addition, median household income hit $59,000 in 2016, a record high and a 3.2 percent jump compared to 2015, he said.
At mid-year 2017, average home prices stood 14 percent above pre-recession levels and more importantly, nearly 70 percent of credit union households own a home, according to Schenk.
“There’s also good news on the liability side of the consumer balance sheet,” he said. “Household debt as a percent of disposable income hit an all-time high of 130 percent during the housing boom, but has trended down to 100 percent, a level last seen in 2002.”
Schenk added that interest rate hikes by the Federal Reserve have been manageable and the average age of cars on the road has risen, meaning there could be more auto loans, a strength of credit unions.
