WRITTEN BYHILLARY
Five years after the onset of theglobal credit crunch, targetedU.S. short-term interest ratesremain near zero and an anemicrecovery poses the risk of the countryslipping back into recession. Meanwhile,Euro-zone turmoil haunts the financialmarkets while regulatory burdenincreases. What’s a credit union managerto do? Here’s what you need to knowabout the months ahead.
Investment Landscape
For investors, the past five years havebeen characterized by steep declines inshort-term interest rates. U.S. governmentbonds delivered exceptionally strongreturns while the U.S. stock market hasbeen somewhat lackluster. Given thatyields are already low, our expectation isthat returns on U.S. government investmentswill be less robust over the next twoyears, yet still slightly better than returnsfrom large-company U.S. equity securities.
The looming “fiscal cliff,” characterized byacross the board spending cuts scheduledto take effect in January 2013, has injecteduncertainty into corporate decision making— stalling investment in plant, equipmentand personnel for the second half of2012. Without such investment, the outlookfor employment growth is dim. Thegood news is that the uncertainty leadingup to the presidential election should easethereafter as our approach to tax policyand deficit reduction becomes clearer.
