CUNA Mutual's Post Brings Bad Tidings
SAN ANTONIO -- CUNA Mutual Group President/CEO Jeff Post didn't wear a hooded black robe during his speech on the economy at the NASCUS State System Summit.
However, given the bleak assessment of the economy that he gave, one might forgive people for thinking of him as the grim reaper.
"We're clearly not in a recovery, and we face the potential risk of the economy declining before it fully stabilizes," Post said. "I believe we're entering a new economy-one that will not have the type of growth or accumulation of wealth we've seen in previous decades. I also believe it's very important to have our eyes wide open for the future. In times of great challenge, there are also opportunities to improve, differentiate and gain market share."
Post said one of the reasons that the economy is still sluggish is because people aren't spending enough money to generate more growth. He noted that consumer debt now represents 120% of personal income, down from 130% last year. While that is healthy for individuals, it's not great for businesses that need additional sales so their bottom lines improve and they can hire more employees. He also noted that $1.3 trillion of consumer debt is delinquent.
Post said although the official unemployment rate is 9.6%, that statistic is misleading because it doesn't count those who have stopped looking. He added that the real unemployment rate is between 10% and 20%, and the economy can't really be considered to have recovered until that figure declines considerably because "there is no such thing as a jobless recovery."
He also said the trends in housing are worrisome, especially the fact that during the second quarter, 14% of people were delinquent on their mortgages and as of July the pace of home sales was the slowest in six and a half years.
Post noted that the situation is even bleaker in some states and cited the fact that 65% of all mortgages in Nevada are underwater.
The dismal housing market is also making it harder for some people to use home equity to fund their retirement, he pointed out.
Post said while he feels better about the economy than he did in 2008 and 2009, "I am clearly not bullish." He said the uncertainty about future tax rates and health care costs are causing businesses to be cautious about spending money on big-ticket items and to hire new people.
But his speech wasn't all negative. Post explained how credit unions can take advantage of the nation's economic difficulties by using this time to reevaluate how they do businesses and prepare themselves for better times ahead.
"This is a great opportunity to clarify your strategy and what sets you apart. Now is the time to improve by leveraging your strengths and reducing costs in areas where you don't differentiate," he said.