The National Credit Union Administration (NCUA) has released the latest video in the agency’s free “YouTube” economic update series. NCUA Chief Economist John Worth’s October analysis examines recent economic developments and covers possible risks, including a discussion of the potential effect of the “fiscal cliff” on credit union performance.
The national labor market continued to add jobs at a moderate pace. Compared to a year ago, the economy has picked up 1.8 million jobs overall and about 1.9 million private sector jobs. In September, the unemployment rate dropped to 7.8 percent—its lowest level since January 2009.
Consumer confidence continues to trend higher, along with new car sales. In September, 14.9 million in auto sales were reported, making it the best sales month in more than four years. New car sales are an important channel for credit union lending—representing about 10 percent of credit unions loan portfolios.
The fiscal cliff—the large increase in taxes and spending cuts scheduled to take place in 2013—is also expected to take a dramatic toll on the economy, if it occurs. The video notes that credit union performance would likely worsen as the economy contracted and unemployment rose as a result of these changes. Credit unions with ties to the federal government could be affected even more significantly.
Click here to view the latest NCUA YouTube video.