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Catalyst Strategic Solutions: Conditions Improve for Most Consumers, but Spending Still Down
Friday, June 13, 2014 6:35 AM

Despite fragility in the employment sector and stagnant wages, conditions continue to improve for most consumers, according to the latest Catalyst Strategic Solutions Marketing Overview & Data Report. Home values remain 12.4 percent higher than this time last year; thereby, helping to strengthen household net wealth. However, it doesn’t appear that consumers are quite ready to loosen their purse strings.

“Unemployment has fallen from 9.9 percent to 6.3 percent over the past few years, but weak growth in spending continues,” notes Catalyst Strategic Solutions Director and Chief Strategist Brian Turner. “When consumers start to feel better about their current jobs and perceive opportunities exist to pursue a better position, they will then increase their spending behavior, and credit unions will experience greater loan demand.”

Turner points out that consumer loan demand has improved this year on the strength of higher vehicle sales, and adding that stronger consumer loan demand is critical to the industry’s overall loan growth in 2014 with mortgage originations expected to fall as much as 40 percent.

Preliminary reports show loans increased at a +4.6 percent annualized pace through the first quarter of 2014, with growth at large credit unions ($500 billion or greater) increasing +11.9 percent. Large credit unions account for only 7 percent of the number of credit unions. This, Turner says, suggests that the remaining 93 percent collectively experienced a -12.0 percent decline in loans during the first quarter of 2014.

“Share growth will remain steady throughout the year, possibly surpassing 2013 performance,” Turner notes.

Catalyst Strategic Solutions Marketing Overview & Data Report shows that total shares increased +14.5 percent during the first quarter, well over the +3.7 percent increase for all of 2013. Again, most of the industry’s increase was experienced at large credit unions with a +20.7 percent increase in the first quarter. The “93 percenters” collectively experienced a +2.1 percent increase.

“Strategically, 2014 remains a transition year for most credit unions – the benefits from which will be realized in 2015 and 2016, when interest rates will be on the rise and consumer spending will be greater,” continues Turner.