SAN ANTONIO — The economy will improve slightly, but consumers will continue to be cautious about spending and talking on new debt, CUNA's top economists said at a session during America's Credit Union Conference.

"Economic conditions will improve even more by 2012 but it won't like all other recoveries because spending will be slower," said CUNA Vice President Mike Schenk. "The sky is not falling, and the good news is that we are in a much better place than a year ago."

He noted that the economy is creating jobs, though not as quickly as everyone wants, and retail sales have increased during 17 of the last 20 months.

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Schenk said he is concerned about the sluggish 1.8% growth rate, continued high unemployment and high foreclosure rates.

The Labor Department reported that the economy only created 54,000 jobs in May and the unemployment rate was 9.1%. However, Schenk said it is even worse than that because if you add discouraged workers who have stopped seeking employment that figure rises to 15.8%.

He said the lack of a decline in foreclosures and the continuation of low prices means you will have 2 million homes and stagnant sales.

CUNA Senior Vice President and Chief Economist Bill Hampel said there is a "building momentum" in the economy caused in part by a slight increase in business investment.

He said for credit unions the next year will feature moderate savings and asset growth and weak, but improving loan growth.

Hampel said that credit unions are in stronger shape because they are more risk adverse than banks. He noted that before the recession 99% of all credit unions were considered to be well capitalized. Now, that figure has declined to 94%.

He also noted that loan delinquencies are higher than normal but they are declining. And he said that if consumers find themselves with extra money they may be more likely to make an extra payment on their mortgage or other loan to decrease the level of their debt. 

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