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The Economy in the Year Ahead: Implications for Credit Unions

John D. Worth, Chief Economist National Credit Union Administration. The Economy in the Year Ahead: Implications for Credit Unions. Presentation to the Utah Credit Union Association March 8, 2013. Slower Growth in 2012. Moderate Employment Gains. Geography of Unemployment.

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The Economy in the Year Ahead: Implications for Credit Unions

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  1. John D. Worth, Chief Economist National Credit Union Administration The Economy in the Year Ahead: Implications for Credit Unions Presentation to the Utah Credit Union Association March 8, 2013

  2. Slower Growth in 2012 The Economy in the Year Ahead

  3. Moderate Employment Gains The Economy in the Year Ahead

  4. Geography of Unemployment The Economy in the Year Ahead

  5. Utah Unemployment Rates The Economy in the Year Ahead

  6. U.S. and Utah Unemployment Rate The Economy in the Year Ahead

  7. CU Performance and Unemployment The Economy in the Year Ahead

  8. Geography of CU ROAA CU Return on Average Assets, 2012Q4, percent The Economy in the Year Ahead

  9. CU Performance and Unemployment The Economy in the Year Ahead

  10. Geography of CU Loan Growth CU Loan Growth by State, 2011Q4 to 2012Q4, percent The Economy in the Year Ahead

  11. CU Performance and Unemployment The Economy in the Year Ahead

  12. Geography of CU Loan Delinquency CU Delinquency Rate by State, 2012Q4, percent The Economy in the Year Ahead

  13. Consumer Confidence Edging Up The Economy in the Year Ahead

  14. Homebuilding Activity Trending Up The Economy in the Year Ahead

  15. Home Sales Moving Higher The Economy in the Year Ahead

  16. Home Prices Rising The Economy in the Year Ahead

  17. Geography of Home Prices – 2012 The Economy in the Year Ahead

  18. U.S. and Utah House Prices The Economy in the Year Ahead

  19. Delinquency Picture is Improving The Economy in the Year Ahead

  20. Delinquency Picture is Improving The Economy in the Year Ahead

  21. Geography of Mortgage Delinquency The Economy in the Year Ahead

  22. Delinquency Picture is Improving The Economy in the Year Ahead

  23. Inflation is Contained The Economy in the Year Ahead

  24. Slow Growth + Low Inflation = Low Interest Rates The Economy in the Year Ahead

  25. Slow Growth + Low Inflation = Low Interest Rates The Economy in the Year Ahead

  26. Slow Growth + Low Inflation = Low Interest Rates The Economy in the Year Ahead

  27. Yield Curve Twisting: Maturity Spread Narrowing The Economy in the Year Ahead

  28. Yield Curve Still Relatively Steep The Economy in the Year Ahead

  29. Though Low, Rates are Still Volatile The Economy in the Year Ahead

  30. Credit Union Deposits Trending Toward More Interest Sensitivity The Economy in the Year Ahead

  31. Growth in Interest-Sensitive Deposits The Economy in the Year Ahead

  32. Rate Environment The Economy in the Year Ahead

  33. Outlook The Economy in the Year Ahead

  34. Summary of Outlook Consensus 2013 Outlook: More improvement, but still far from “normal.” • Unemployment down. • Moderate consumer spending growth. • Home prices and sales up. • Inflation modest. • Interest rates up slightly. • Fed tapers off large scale asset purchases. The Economy in the Year Ahead

  35. Rough Consensus Outlook The Economy in the Year Ahead

  36. Credit Union Implications of Consensus • Slowly improving economy means environment facing credit unions will be modestly supportive. • Environment will be consistent with: • Moderate growth in deposits and loans. • Falling delinquency rates. • Little change in net interest margins. • Modest improvements in ROA and net worth ratios. The Economy in the Year Ahead

  37. Emergency Liquidity WITHOUT The Economy in the Year Ahead

  38. Summary • Credit union performance in 2013 depends on general economic environment and credit union sector developments. • Range of potential macro outcomes suggests noticeable impacts on credit unions. • Only looked at general economic environment developments here. • Ultimate 2013 outcomes may depend more on credit union sector developments. The Economy in the Year Ahead

  39. Economic Information for the Public • Some OCE information is available to the public and can be accessed through Credit Union Resources and Information section on the NCUA website: • State and City Economic Data – Historical house price growth and unemployment rates for the states and metro areas. • NCUA Quarterly U.S. Map Review – Maps and analysis of credit union performance by state, with tables. • YouTube Economic Updates – Monthly summary of relevant economic and credit union conditions. The Economy in the Year Ahead

  40. Contact Us John D. Worth, Chief Economist JWorth@NCUA.Gov OCEMail@NCUA.Gov The Economy in the Year Ahead

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