The NAFCU Journal January-February 2020 - 15

equipment while the trade war continues," Eisel says. "Supply chains have
been disrupted, and this has had
a profound effect on confidence in
the business community."

Stimulus Suggestions

Eisel believes resolving the trade
conflict would go a long way toward
rebuilding business confidence and
future investments. Something coming
out of Washington in the form of fiscal
stimulus - like the 2018 tax cut that
provided a short-lived boost - could
help the country's economy stay afloat.
"Significant dollars are going to farmers to help support them right now as
they struggle with poor weather and
trade challenges," he says, but broader
measures are needed to help the whole
of America.
"Most folks are looking at the Fed to do
something with regard to interest rates,
but rates are already heading back to
record low levels," Eisel says. "While
this change in direction in monetary
policy is welcomed, there still needs
to be support from the fiscal side of
the house, which doesn't appear close
to happening."
Interest rates also play a major role in
credit unions' bottom lines. One Nevada's Parrish says: "The odds currently
are not with a rising-rate scenario
[from the Federal Reserve], but a
slightly rising-rate environment might
be the most desirable for a majority of
our credit unions looking for a bit of
spread relief. A declining-rate scenario
will certainly help bolster loan volumes,
but with funding costs still sound
asleep on the floor, the continued

squeeze on net interest spread should
be widely anticipated."
Catalyst's Shipman believes a global
economic slowdown and the increased
impact of trade tariffs will continue to
affect the U.S. economy. "Conversely, a
tariff reduction could have a stimulative
effect on potentially extending the current U.S. economic cycle."
Lower interest rates could help prop up
a sagging economy, Inman says, but the
lower rates also would reduce credit
unions' lending margins.

Politics and Presidential
Elections

Inman believes a major barrier to continuing economic growth in 2020 is the
current state of affairs in Washington,
D.C., in which the standoff between a
Democrat-controlled House of Representatives and Republican-controlled
Senate creates legislative impasses.

"If the government could work together
and do something, that would have
the greatest impact on consumer
sentiment," he says.
A sudden course change in today's highly
partisan, politically charged environment, however, seems unlikely.
Presidential elections historically
impact economic decisions in two ways,
Shipman says. If the economy is doing
well around the time of the election,
voters tend to reelect the incumbent;
if economic conditions worsen, the
challenger tends to gain more votes.
Secondly, stock market returns are generally higher in a president's third and
fourth years in office.
"There is also an element of uncertainty
that comes with presidential elections," he explains. "Things such as tax
modifications, regulation adjustments
and fiscal policy can have a profound

''

Home sales have picked up since the start of 2019, thanks
to low rates and a strong labor market. 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.

''

- CURT LONG, CHIEF ECONOMIST AND VICE PRESIDENT OF RESEARCH, NAFCU
THE NAFCU JOURNAL  JANUARY-FEBRUARY 2020

15



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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