Leaders Discuss Strategic Positioning for 2020 Economy at Conference

L-R: Sharon Turley, VP of Regulatory Advocacy for the Leagues; Michael Stinson, President of BankTrends; Robert Eyler, Economist for Sonoma State University and Board Member of Redwood CU; Mark Wert, Senior Advisor for Catalyst Strategic Solutions; and Dale Stover, Managing Advisor for Raymond James' Strategic Investment Management Services
L-R: Sharon Turley, VP of Regulatory Advocacy for the Leagues; Michael Stinson, President of BankTrends; Robert Eyler, Economist for Sonoma State University and Board Member of Redwood CU; Mark Wert, Senior Advisor for Catalyst Strategic Solutions; and Dale Stover, Managing Advisor for Raymond James' Strategic Investment Management Services

Credit union leaders attending last week’s 4th annual Your Economy—Your Credit Union Conference learned that economic growth is most likely slowing down and will continue doing so between now and 2022. California will decelerate faster than Nevada.

However, the implications for credit union members and balance sheets depend on how that slowdown “looks and feels” over time, especially given each state’s unique business and consumer environments.

Also, it’s still difficult to make a solid argument for the broader economy falling into a recession within the next 12 – 24 months given the current environment. Job market growth may be downshifting, but the labor market is nowhere near a precipice of contracting at a rapid pace in the foreseeable future, according to keynote speaker Robert Eyler—an economist at Sonoma State University and board member of Redwood CU.

“Even if business spending contracts, there’s no recession in sight if the job market retains its slowing rate of growth,” Eyler said. “The greater problem is, we have not seen compounded exponential growth in worker incomes over the past 10 years. When you hear about an ‘economic slowdown’ in the news, these slower income growth rates being experienced since the last recession are the numbers fueling this current assessment.”

Eyler painted a top-to-bottom picture of issues credit union leaders should be aware of as they enter strategic planning season for 2020. Workers, members, loans, deposits, geography, demographics, the housing market, business climate, and California and Nevada’s unique economies were discussed.

So was the Federal Reserve. “The Fed doesn’t want the financial markets, and you, to know too much before things happen in the economy,” he said. “They want you to react to monetary decisions and queues at what they feel is the right time—not too early.”

Participants discussed how the Fed may drop its “federal funds” bank-to-bank interest rate by 50 basis points instead of 25 basis points if it decides to venture down that path. “It seems the Fed is likely to drop rates before increasing them again, which could increase the probability of an economic downturn based on history," Eyler added.

He was one of five speakers at the yearly event, which was hosted by the California and Nevada Credit Union Leagues in Ontario, CA (at the Leagues’ headquarters).

Other speakers and panelists included Mark Wert, senior advisor for Catalyst Strategic Solutions (at Catalyst Corporate); Dale Stover, managing advisor for Raymond James’ Strategic Investment Management Services; Sharon Turley, vice president of regulatory advocacy for the Leagues; and Michael Stinson, president of BankTrends (a subsidiary of Informa Financial Intelligence).

Speakers, panelists and those in the audience discussed credit union investments, balance sheet scenarios, and strategic planning—as well as regulations that may have a financial impact on credit unions over the next couple of years. One hot topic was the Financial Accounting Standards Board’s (FASB) Current Expected Credit Loss (CECL) rule that credit unions across both states are preparing for, including what the National Credit Union Administration (NCUA) will expect, how “loss reserves” should be calculated, and other issues.

Stay tuned during 2019 for upcoming quarterly update webinars on the economy presented by Dr. Robert Eyler, as well as a special “Your Economy—Your Credit Union” update during REACH 2019! You can also visit our Your Economy webpage for the latest forecast report for your local region in California and Nevada.

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