In a video update released Dec. 23, NCUA Chief Economist Ralph Monaco said that while the strongereconomy is good for credit unions, there is still uncertainty aboutthe economic outlook and future path of interestrates.

In the video, Monaco discussed the affect of rising interestrates in a discussion of economicconditions.

“We’ve entered a new interest rate environment, where risingrates, both short- and long-term, are more likely,” Monaco said.“Now is a good time for credit unions to evaluate income andbalance sheet changes across a range of potential interest ratescenarios, including one that looks like the Federal Reserve’sprojection.”

With a rise in demand for autos and houses, credit unions areseeing a benefit from the rise in demand for big-ticket consumergoods, Monaco said. Auto sales were well above the pre-recessionaverage in the third quarter of 2015. Home sales remain at arelatively high level. Both are an important for credit unionlending, accounting for almost 85% of the credit union system’sloan portfolio, he said.

However, credit unions with ties to the energy or themanufacturing industries could be seeing weaker loan demand, higherdelinquencies and lower deposit growth, according to Monaco.

He said that with the broader unemploymentrate being the best the U.S. economy has seen in years, creditunion members will benefit. He shared the graph at left in thevideo.

Monaco cited decreasing gas prices for improved automobile salesduring the first two months of the third quarter. The improvementwas primarily the result in sales of higher valued SUVs. Theweakness in the energy sector helped improve other sectors, such asthe auto industry, he said.

A rise in demand for homes increased the median price to$225,000 in October, he added.