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New Economic Update Focuses on Trends, Interest Rates, Brexit
Thursday, July 7, 2016 6:45 AM

Firm labor markets and increasing consumer spending means credit risk is likely to remain low in most areas, according to a new Economic Update video released today by the National Credit Union Administration.

The latest installment of NCUA’s economic series, available here, features three segments, making it easier for viewers to get the information relevant to them.

In the opening segment, NCUA Chief Economist Ralph Monaco reviews current economic trends and how they could affect credit union income and costs. Topics covered include recent labor market developments, housing market improvements and household spending.

In the second segment, Monaco focuses on interest rates and the outlook going forward. The mixed bag of U.S. economic statistics and heightened concern about foreign economic developments were enough to convince Federal Reserve policymakers to put off increases in short-term interest rates until later this year, at the earliest.

“The timing and pace of future rate increases will depend on how the economy performs,” Monaco said. “For most credit unions, if they are alert to changing conditions, the likely rate environment should be manageable.”

The final segment examines Brexit—the United Kingdom’s recent decision to leave the European Union and the implications for the United States and, potentially, for the credit union sector.

According to Monaco, the Brexit vote has dimmed the outlook for growth in other countries over the next few years and raised financial market uncertainty. That may eventually translate into somewhat slower U.S. growth directly, with much of the effect showing up in manufacturing and commodities production.

“Brexit reminds us that economic circumstances can change quickly,” Monaco said. “Credit unions need to be aware and ready to adapt to potential changes that can affect the financial health of their membership.”

NCUA’s Economic Update video series is an ideal information resource for credit union board members, loan officers and management. It is available on NCUA’s YouTube channel.