The NAFCU Journal May - June 2019 - 10

THE BOTTOM LINE

The chart on the previous page shows
quarterly pairs of cyclical unemployment (actual unemployment minus the
estimated "natural" rate) and inflation.
In the 1970s and early 1980s, the relationship was a strong one, with periods
of declining unemployment generally
accompanied by higher inflation. But in
the decades that followed, that relationship has weakened considerably.
Over that time, the economic model
has evolved to take into consideration a
couple of other important factors: past
inflation and expected future inflation. Taken together, these have some
important ramifications. By including
past inflation in the model, economists
are acknowledging a "stickiness" or persistence in inflation trends. The Federal
Reserve (the Fed) has bemoaned how
long it has taken to bring inflation from
recession-era levels back to its 2 percent
target. Meanwhile, the expectations
component implies that economic forces

that might ordinarily be expected to
contribute to changes in inflation might
be overridden by expectations. It is this
feature in particular that economists
are focusing on as they try to understand why inflation has remained so low
recently despite historically low unemployment. To the degree that the Fed's
inflation target is credible, it could serve
as an anchor to inflation expectations,
and hence to current inflation.
The upshot is that inflation may not
be as fearsome as it has been in the
past, lurking in the shadows of every
economic expansion, waiting to bring
it to a premature end. Fed officials have
given subtle hints that they may be
adopting such a view. In an October
2018 speech, Fed Chairman Jerome
Powell stated that "many factors, including better conduct of monetary policy
over the past few decades, have greatly
reduced ... the effects that tight labor
markets have on inflation."

If that is the case, it presents a
different set of questions for the Fed.
On the one hand, there is less urgency
to raise rates mid-expansion merely
to head off the threat of inflation
before it has even appeared. Rather,
it is inflation expectations that must
be monitored closely. So long as
they are stable, lower interest rates
are not likely to result in an overheating of the economy. But any indication
that public confidence in the Fed's
inflation target is diminishing would
need to be addressed forcefully.
It may be too late to incorporate
lessons learned from recent years
into the current expansion. But the
next one is likely to see the Fed leave
interest rates lower for longer, relying
on the public's faith that it will
respond swiftly if price pressures
do arise.
Curt Long is NAFCU's chief economist and
vice president of research.

Index to Advertisers
Ascenus
Phone: 800-346-3860 ............................................................ 2
Amazon Web Services
Website: www.aws.amazon.com/financial-services .... 5
BFB Gallagher
Phone: 908-867-7458
Website: www.BFBGallagher.com.................................... 9
The Clearing House
Website: www.theclearinghouse.org/events ............... 11
CU Direct
Website: www.CUDirect.com/LendingInsights ............ 15
CUNA Mutual Group
Website: www.cunamutual.com/TruStage....................C3
DefenseStorm
Phone: 206-512-8691
Website: www.DefenseStorm.com................................. 17
Franklin Madison
Website: www.franklin-madison.com ............................ 21

10

Geezeo
Phone: 917-364-5678
Website: www.geezeo.com ............................................. 25
LendKey
Phone: 646-626-7414
Website: www.lendkey.com/lend/research .................. 29
Mastercard
Website: go.mastercardadvisors.com/nafcu ............... BC
NAFCU
Phone: 800-344-5580
Website: www.nafcu.org/..................................... 39, 47, 51
Patriot Offcer
Phone: 888-227-7967 .......................................................... 31
Pentegra
Phone: 800-872-34731
Website: www.pentegra.com .......................................... 33

Q2
Website: www.q2ebanking.com/analytics .................... 41
SageNet
Website: www.sagenet.com/finance ............................. 23
Securian
Phone: 763-442-4348
Website: www.securian.com........................................... 37
Trellance
Website: www.trellance.com/ironsafe .......................... 45
Triad
Website: www.TriadFS.com ............................................. 43
Worldpay
Phone: 866-222-2201
Website:
www.vantiv.com/financial-institutions/get-started ....IFC

PSCU
Phone: 844-367-7728
Website: www.pscu.com.................................................. 34

THE NAFCU JOURNAL MAY-JUNE 2019


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The NAFCU Journal May - June 2019

Table of Contents for the Digital Edition of The NAFCU Journal May - June 2019

The NAFCU Journal May - June 2019
Contents
Conferences
From the Chair
Washington and Industry Briefs
The Bottom Line
Welcome, New Members
Knowledge Is Power Credit unions leverage data and analytics for strategic business growth.
Lowering the High Cost of Internal Fraud Policies, culture and training work together to improve fraud detection and prevention.
2019 Annual Conference Exhibitor Directory
Executive Spotlight
Management Insight
Compliance Central
Inside NAFCU Services
From the President’s Desk
The NAFCU Journal May - June 2019 - The NAFCU Journal May - June 2019
The NAFCU Journal May - June 2019 - Cover2
The NAFCU Journal May - June 2019 - Contents
The NAFCU Journal May - June 2019 - 2
The NAFCU Journal May - June 2019 - Conferences
The NAFCU Journal May - June 2019 - From the Chair
The NAFCU Journal May - June 2019 - 5
The NAFCU Journal May - June 2019 - Washington and Industry Briefs
The NAFCU Journal May - June 2019 - 7
The NAFCU Journal May - June 2019 - The Bottom Line
The NAFCU Journal May - June 2019 - 9
The NAFCU Journal May - June 2019 - 10
The NAFCU Journal May - June 2019 - 11
The NAFCU Journal May - June 2019 - Welcome, New Members
The NAFCU Journal May - June 2019 - 13
The NAFCU Journal May - June 2019 - 14
The NAFCU Journal May - June 2019 - 15
The NAFCU Journal May - June 2019 - 16
The NAFCU Journal May - June 2019 - 17
The NAFCU Journal May - June 2019 - Knowledge Is Power Credit unions leverage data and analytics for strategic business growth.
The NAFCU Journal May - June 2019 - 19
The NAFCU Journal May - June 2019 - 20
The NAFCU Journal May - June 2019 - 21
The NAFCU Journal May - June 2019 - 22
The NAFCU Journal May - June 2019 - 23
The NAFCU Journal May - June 2019 - 24
The NAFCU Journal May - June 2019 - 25
The NAFCU Journal May - June 2019 - Lowering the High Cost of Internal Fraud Policies, culture and training work together to improve fraud detection and prevention.
The NAFCU Journal May - June 2019 - 27
The NAFCU Journal May - June 2019 - 28
The NAFCU Journal May - June 2019 - 29
The NAFCU Journal May - June 2019 - 30
The NAFCU Journal May - June 2019 - 31
The NAFCU Journal May - June 2019 - 32
The NAFCU Journal May - June 2019 - 33
The NAFCU Journal May - June 2019 - 34
The NAFCU Journal May - June 2019 - 2019 Annual Conference Exhibitor Directory
The NAFCU Journal May - June 2019 - 36
The NAFCU Journal May - June 2019 - 37
The NAFCU Journal May - June 2019 - 38
The NAFCU Journal May - June 2019 - 39
The NAFCU Journal May - June 2019 - 40
The NAFCU Journal May - June 2019 - 41
The NAFCU Journal May - June 2019 - Executive Spotlight
The NAFCU Journal May - June 2019 - 43
The NAFCU Journal May - June 2019 - 44
The NAFCU Journal May - June 2019 - 45
The NAFCU Journal May - June 2019 - Management Insight
The NAFCU Journal May - June 2019 - 47
The NAFCU Journal May - June 2019 - Compliance Central
The NAFCU Journal May - June 2019 - 49
The NAFCU Journal May - June 2019 - Inside NAFCU Services
The NAFCU Journal May - June 2019 - 51
The NAFCU Journal May - June 2019 - From the President’s Desk
The NAFCU Journal May - June 2019 - Cover3
The NAFCU Journal May - June 2019 - Cover4
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