ORLANDO, Fla. – Household spending accounts for two-thirds of gross domestic product, but fortunately business investment and foreign trade is up to help counter-balance the overall effect.
However, CUNA Chief Economist Bill Hampel explained that "wealth-effect" spending-where people realized they were much better off than they thought due to increasing home values-was widespread and is fading. Additionally, the yield curve is flat. This will increase savings and slow loan growth, which will further pinch net interest margins, he said, but that's OK.
Credit unions do not need a return on assets as high as they might want, he said. "I think ROA should be closer to 50 basis points," Hampel stated. At that point, one credit union official said that is around where his institution was operating.
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