New NCUA economic video describes opportunities, risks in improving economy

Credit Unions Could See Deposit and Loan Growth But Also Face Rising Interest Rates

ALEXANDRIA, VA (July 30, 2014) – An improving labor market and falling unemployment rates are boosting performance indicators like loan demand and reducing delinquencies at credit unions, but they may also bring the potential for rising interest rates according to a new economic update released today by the National Credit Union Administration.

The latest video in the agency’s Economic Update series, available here, features an in-depth discussion from NCUA’s Chief Economist John Worth on the implications of a recovering economy on credit union balance sheets and the interest rate environment.

“The improving economy brings with it lots of positives for credit unions,” Worth said, “but, at the same time, a sustained pickup in the general economy brings the potential for interest rates to rise.”

Federal Reserve policymakers recently projected short-term interest rates will begin rising sometime in 2015 if the economy performs in line with current expectations.

Recent improvements in the economy have produced gains for credit unions. In the first quarter, outstanding new car loans rose 14 percent, while used auto loans amounted to about 20 percent of all loans. Consumer installment credit outstanding at all lenders was up 6.7 percent over the year ending in May, the biggest 12-month increase since late 2002. Consumer credit outstanding at credit unions continued to outpace lending at other institutions.

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

NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the U.S. Government, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of more than 97 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. At and Pocket Cents, NCUA also educates the public on consumer protection and financial literacy issues..

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