The NAFCU Journal January-February 2020 - 14

Housing and Auto Markets

A major economic indicator is housing.
Credit unions need a healthy housing
market in order to provide mortgages
to homebuyers and to refinance
existing loans for homeowners. Those
interviewed had been experiencing a
strong housing market in their respective regions. "We still have affordable
homes," says D. Samuel Inman, CFO
of Community First Credit Union
in Jacksonville, Fla. And Inman
expects Florida's population to grow
by 6.8 percent in the next several
years, compared to 3.3 percent overall
nationally, keeping the demand for
housing strong.
His optimistic outlook is echoed by
other CUEG members who've seen
similar upticks in the market.
"Home sales have picked up since the
start of 2019, thanks to low rates and a
strong labor market," says Curt Long,
NAFCU's chief economist. "But the
really positive development has been
increased construction activity, both in
permits and starts. That addresses the
biggest constraint on the market, which
is on the supply side. Inventory levels
are more consistent with total sales,
and that has led to some moderation in
price growth."
Similarly, the vehicle loans market has
been steady the past two years. Parrish
sees no reason why that trend can't
continue, especially if interest rates
remain low. "A slightly lower-rate scenario, combined with some reasonable
stability with other key economic indicators, could create a perfect storm this
year for all areas of lending," he says.

Business Investments and
Consumer Sentiments

Chris Shipman, a financial adviser
for Dallas-based Catalyst Strategic
Solutions, says ongoing economic
expansion and business investment
throughout the Southwest, and
particularly in major metropolitan
areas of Texas, are positive indicators
of a healthy economy, but "business
sentiment could be considered
14

''

I guess I'd have to lean toward some
degree of slowdown in the coming year. But a
recession isn't just going to start itself. So
the question, as I see it, is: What will the
trigger be? Your guess is as good as mine.
- PAUL PARRISH, PRESIDENT AND CEO, ONE NEVADA CREDIT UNION

neutral, as potential economic conditions and tariffs have caused some
concern." The tight labor market
in particular, Shipman says, could
threaten economic stability and
growth. "Hiring and retaining employees is a current and growing concern
for numerous sectors."
Inman notes that certain commercial
industries, such as manufacturing, will
likely pull back on inventory levels for
2020 or 2021 due to concerns of a slowdown and because of digital investments
to modernize services.
Apart from inventory and investments,
the economy's perceived strength hinges
somewhat on consumer confidence,
and that could shift in the coming year,
according to Fred Eisel, chief investment
officer for Vizo Financial Corporate
Credit Union in Greensboro, N.C.
"The consumer is still the main reason
the economy is hanging in there despite
uncertainty surrounding trade," Eisel
says. "It seems consumer sentiment
remains positive, given the positive data
in retail sales and still-robust housing.
Auto sales have come off their highs in
previous years."
But, Eisel warns, "Wage growth remains
stagnant, and this could dampen
confidence. The recent manufacturing
numbers could spell a much slower
2020 as well, and as long as the trade
war continues, consumer and business
confidence will have a very difficult
time improving."
Inman suggests credit union leaders
review their underwriting, given that
some took on more risk or lowered

''

credit standards during the long economic recovery of the last several years,
and they may want to pull back a bit.
Long is a bit more optimistic, despite
consumer sentiment falling due to market volatility and various sources of rising
political risks. "Households have continued to spend at a brisk pace," he says.
"Their balance sheets are still in decent
shape, and as long as businesses keep hiring, there is no reason why the backbone
of the economy should deteriorate."

Trade Wars and Tariffs

For much of 2019, the United States was
engaged in a trade war with China. Not
only were consumers and manufacturers
feeling the pinch from higher-priced
imported goods, but even credit unions
themselves were fiscally impacted.

Inman's Community First Credit Union
remodeled or refurbished branches in
2019 and noticed after the trade war
took effect that vendors began limiting
quotes to 30 days instead of the typical
60 to 90 days.
"I think that's how businesses were starting to respond: getting tighter on their
bids and proposals," he says.
Everyone agrees the manufacturing
sector has suffered the most from
the trade war. Eisel says manufacturing
numbers across the country have
been "horrible" since the trade war
ramped up in mid-2019 and both shipments and new orders fell dramatically.
Firms also were reporting a decline
in production, backlogged orders
and weakening local business conditions. "Most companies are not
going to invest in people and

THE NAFCU JOURNAL  JANUARY-FEBRUARY 2020



The NAFCU Journal January-February 2020

Table of Contents for the Digital Edition of The NAFCU Journal January-February 2020

The NAFCU Journal January-February 2020
Contents
Conferences
From the Chair
2020 Advocacy Priorities
The Bottom Line
Leadership Download
Warning: Speed Bumps Ahead
Stepping Into 2020
2020 Vendor Directory
Executive Spotlight
Management Insight
Compliance Central
Inside NAFCU Services
From the President’s Desk
The NAFCU Journal January-February 2020 - The NAFCU Journal January-February 2020
The NAFCU Journal January-February 2020 - Cover2
The NAFCU Journal January-February 2020 - Contents
The NAFCU Journal January-February 2020 - 2
The NAFCU Journal January-February 2020 - Conferences
The NAFCU Journal January-February 2020 - From the Chair
The NAFCU Journal January-February 2020 - 5
The NAFCU Journal January-February 2020 - 2020 Advocacy Priorities
The NAFCU Journal January-February 2020 - 7
The NAFCU Journal January-February 2020 - The Bottom Line
The NAFCU Journal January-February 2020 - 9
The NAFCU Journal January-February 2020 - Leadership Download
The NAFCU Journal January-February 2020 - 11
The NAFCU Journal January-February 2020 - Warning: Speed Bumps Ahead
The NAFCU Journal January-February 2020 - 13
The NAFCU Journal January-February 2020 - 14
The NAFCU Journal January-February 2020 - 15
The NAFCU Journal January-February 2020 - 16
The NAFCU Journal January-February 2020 - 17
The NAFCU Journal January-February 2020 - Stepping Into 2020
The NAFCU Journal January-February 2020 - 19
The NAFCU Journal January-February 2020 - 20
The NAFCU Journal January-February 2020 - 21
The NAFCU Journal January-February 2020 - 22
The NAFCU Journal January-February 2020 - 2020 Vendor Directory
The NAFCU Journal January-February 2020 - 24
The NAFCU Journal January-February 2020 - 25
The NAFCU Journal January-February 2020 - 26
The NAFCU Journal January-February 2020 - 27
The NAFCU Journal January-February 2020 - 28
The NAFCU Journal January-February 2020 - 29
The NAFCU Journal January-February 2020 - 30
The NAFCU Journal January-February 2020 - 31
The NAFCU Journal January-February 2020 - 32
The NAFCU Journal January-February 2020 - 33
The NAFCU Journal January-February 2020 - Executive Spotlight
The NAFCU Journal January-February 2020 - Management Insight
The NAFCU Journal January-February 2020 - Compliance Central
The NAFCU Journal January-February 2020 - 37
The NAFCU Journal January-February 2020 - Inside NAFCU Services
The NAFCU Journal January-February 2020 - 39
The NAFCU Journal January-February 2020 - From the President’s Desk
The NAFCU Journal January-February 2020 - Cover3
The NAFCU Journal January-February 2020 - Cover4
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