The economy will grow by 3% this year and savings balance growth at credit unions will remain at 5%, according to an economic forecast released today by CUNA.
The nation's economic growth would represent an increase from the 2.6% rate last year and would be triggered by private sector job growth and expansionist monetary and fiscal policy.
However, the report predicts that unemployment will be high for two years. This morning, the labor Department reported that unemployment was 9.4% in December, compared with 9.8% in November.
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The 5% savings balance growth at credit unions would be below the five-ear average of 6.1%. CUNA said the fall off was due to consumers likely spending more money as the economy improves.
Because of consumers' reluctance to take on new debt, credit unions should use the fact that they often have better rates to entice people with existing loans at other financial institutions, said CUNA Vice President for Economics and Statistics Michael Schenk, in a statement accompanying the report.
"{I)t makes sense to redouble efforts to steal loans from other financial institutions," Schenk said. "While members' appetites for new debt are low, it may be possible to entice those burdened with higher-rate bank loans to come to credit unions."
The report also said the improvement in the economy will cause a decline in loan delinquency and charge off rates. Credit unions' return on average assets will be 0.6%, according to CUNA's projections. During the third quarter of 2010, it was 0.45% and it was 0.40% in the second quarter, according to data released by the NCUA.
You can read CUNA's economic forecast here.
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