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CUs Won't Experience Same Strong Q1 Growth in Consumer Loans This Year, Turner Says
Tuesday, February 18, 2014 7:00 AM

Overall retail sales decline -0.4 percent in January, following a downwardly revised -0.1 percent decline in December. Automobiles and auto parts drove down the total. Excluding automobiles, sales were virtually unchanged, after gaining +0.3 percent in December (also downwardly revised). Brian Turner, director and chief strategist with Catalyst Strategic solutions, says the report on retail sales come with little surprise.

“Consumers remain skeptical about the employment sector even though they opened their wallets wider during the fourth quarter,” he notes.

After experiencing a modest +2.0 percent increase in consumer spending, it rose by +3.2 percent during the last three months of 2013. Initial reports indicate spending has slowed over the past six weeks.

“It is quite clear that credit unions will not experience the same strong first quarter growth in consumer loans this year as the industry realized in 2013,” adds Turner. “It also brings into question whether the industry can repeat 2013’s 10 percent increase in consumer loans.”

According to Turner, larger credit unions ($500 million and greater in assets) saw consumer loans increase over 14 percent last year while the remaining institutions (94 percent of the total number of credit unions) collectively experienced a 3 percent increase.

“With mortgage applications expected to decline in 2014, credit unions will be challenged to repeat the 7.5 percent increase in overall loans that they realized in 2013,” continues Turner. “Still, it could be a year when smaller credit unions actually see improvements in loan demand while larger credit unions see slower demand.”

Other Key Indicators:

  • Business Inventories Increased +0.5 percent in December and +1.6 percent in 2013. 
  • Industrial Production  Fell -0.3 percent in January with the manufacturing component falling -0.8 percent. This could indicate the manufacturing sector is once again losing traction.
  • Consumer Sentiment  Remained steady in February’s survey as a weather-related dip in perceived current conditions was offset by a rise in expectations. The index advanced greatly during the last two weeks in January.