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Loan Demand May Not Repeat Last Year's Strong First Quarter Performance, Turner Says
Tuesday, February 11, 2014 6:50 AM

While the nation’s unemployment rate dropped to 6.6 percent, approximately 10.2 million people remain unemployed. The nation’s underemployment rate, combining the unemployed with part-timers and those who have deferred their search, dropped to 12.7 percent of the labor force, or about 19.7 million people.

Gallup’s Job Creation Index held steady in January with 35 percent of Americans reporting their employer was hiring versus 16 percent who reported they were reducing payrolls.

Other Key Indicators –

  • Vehicle Sales Fell in January to a 15.2 million unit annual rate, slightly below the pace experienced this time last year. 
  • Construction Spending – Eased in December, edging up 0.1 percent after a 0.8 percent increase in November.

According to Brian Turner, director and chief strategist with Catalyst Strategic Services, employment and wage growth are major variables in the nation’s economic recovery.

“Preliminary reports show spending may have increased +3.3 during the fourth quarter, following a +2.0 percent average over the previous three months,” notes Turner. “But there are indications that spending has slowed during the first few weeks of 2014, raising concerns that loan demand may not repeat last year’s strong first quarter performance.”

With an expected decline in mortgage loan originations, Turner says this year’s loan growth could depend entirely on the strength in consumer loan demand.

“Credit unions will be challenged to effectively tap into that resource,” he suggests.