CHICAGO -- There probably won't be a double dip during the recovery but the probability of one has increased because of the slow rate of increase in job growth and in GDP.
That's the assessment of the Credit Union Economic Group, according to the group's presentation during NAFCU's Annual Conference here.
"We are looking at slow, sluggish economic growth with not much interest rate change by the Federal Reserve," said CUNA Chief Economist Tun Wai.
He said the CUEG predicts that at credit unions there will be a 2.47% loan growth rate this year and 4.74% next year. There will be 7.09% savings growth in 2010 and 6.37% next year, they project. CUEG predicts a 2.41% increase in GDP this year and a 2.54% increase in 2011. Because the of the slow growth, the Fed funds rate will stay at 0.25% this year and increase to 1.27% next year.
CUNA Mutual Group Chief Economist David Colby said in addition to specific economic problems, part of the challenges facing policymakers and financial institutions are psychological. "When it comes to perception, your members don't see that we are in recovery," he said.
Colby asked the approximately 60 people attending the session if they think there is a recovery going on and only one person raised his hand.
In response, Colby quipped "I want some of that drug."
He said the biggest risks to the economy include more job losses, the stalling of the nation's economic engine, another credit crisis and interest rate increases.