ARLINGTON, Va. -- There won't be a double dip recession but the short term outlook is for modest growth, the top economists of CUNA and NAFCU said last night.
CUNA Chief Economist Bill Hampel and NAFCU Chief Economist Tun Wai discussed their thoughts at a meeting of the Metropolitan Area Credit Union Management Association.
Hampel predicted there will be modest growth in consumer spending, adding that the long recession could have two different effects on people's willingness to spend money.
"People have older cars and other big-ticket items and they could decide that it is time to buy new ones or they could decide that they have managed with older products and could manage a little longer,'' Hampel said.
Wai said consumers will be cautious because of the severity of the recession.
"They have long memories about job losses that they or their friends experienced so it will take a while until they get back to old spending patterns,'' he said.
He also said that because many people have mortgages that are larger than the value of their home they won't be in a position to refinance or take out other loans and this will hurt credit unions.
Wai also urged the executives to be very careful about the loans they make and when doing planning to think about the credit union's long-term goals.
Hampel said the loss of revenue from reductions in interchange fees may be overstated but he urged credit unions not to be afraid to charge for certain services to make up for revenue losses.
Wai said the Obama administration's and Congress' focus on job creation could mean that this is the best chance in a long time for credit unions to achieve their goal of persuading lawmakers to raise the cap on member business loans.
The discussion was moderated by Credit Union Times' Editor in Chief Sarah Snell Cooke.