DENVER — Regardless of which party wins the White House and control of Congress, 8% unemployment may be something we’ll have to live with, CUNA Mutual CEO Jeff Post told his general session audience last week during the 2012 NASCUS Summit here.
Post said thanks to outsourcing overseas and technology that has replaced human labor, many jobs aren’t coming back. Construction and real estate jobs won’t return for awhile, cuts to government budgets will result in additional job losses, and if the federal government doesn’t soon resolve the so-called fiscal cliff, companies will pull in their horns and shy away from investing “until they know the rules of the game going forward,” Post said.
The good news is there hasn’t been a second unemployment shock as many had feared, and government stimulus programs have helped, he said. However, the country must consider if high unemployment isn’t just a temporary issue but systemic.
The U.S. hasn’t seen the interest rate spikes experienced elsewhere in the world, “not because we’re doing well, but because we’re the cleanest of the dirty shirts,” Post said.
Low interest rates are a drag on the economy, he added.
Low interest rates “generally stimulate the economy, but the reality is rates have been so low for so long, everyone who could take advantage of them already have,” he said.
If the federal government doesn’t modify its policies, tax increases and spending cuts will automatically kick in, and the economy will likely dip into another recession in 2013, he said. The resulting decreases in disposable income would have a negative impact on loan demand, which is just starting to recover for many credit unions.
“We are in a fragile economy. Even a small shock when you’re fragile can hurt you,” he said.