Adjusting to the Realities of a New Year
Forget that jobless claims were revised upward, even higher than initial projections. The New Year is a time for optimism. As California CU League Economist Dwight Johnston wrote in his commentary in the Trust for Credit Unions e-newsletter, “This was the fifth year in a row of triple-digit gains on the first trading day of the year.”
But while the stock market rallies, the economy does not necessarily follow. In addition to the unemployment numbers, the consumer confidence index is depressed and home-refinance applications, accounting for 82% of total mortgage activity, have declined for three consecutive weeks, according to the Mortgage Bankers Association.
One bright spot appears to be the automobile market, which TransUnion announced just before the holidays, is forecast for record-low delinquencies and increasing amounts borrowed. According to the credit bureau, auto loan debt per borrower is expected to increase from an estimated $13,689 at fourth-quarter 2012 to $14,133 at year-end 2013. Loan delinquencies in the category essentially are expected to hold steady from 0.36% at yearend 2012 to 0.37% at year-end 2013.
In part there is great uncertainty as to whether and when Congress will pass and the president will sign a long-term solution to the fiscal cliff crisis. Every lender in credit unions knows you don’t lend beyond a borrower’s ability to repay or the credit union will likely lose the money.
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