1. Economic Overview Washington State Examiner School
Office of the Chief Economist
National Credit Union Administration
Economic Overview Washington State Examiner School
May 1, 2017

2. Credit Union Performance Trends
Recent Data
About Credit Union Performance in Washington, NCUA Region 5, and the Nation
NCUA Region 5 is responsible for all federally insured credit unions in Alaska, Arizona, California, Guam, Hawaii, Idaho, Nevada, Oregon, Utah, and Washington.
Economic Overview

3. Credit Union Performance: Q4 Version
Updated 4/6/2016
Economic Overview

4. Credit Union Performance: Q4 Version
Updated 4/6/2016
Economic Overview

5. Credit Union Performance: Q4 Version
Updated 4/6/2016
Economic Overview

6. Credit Union Performance: Q4 Version
Updated 4/6/2016
Economic Overview

7. Credit Union Performance: Q4 Version
Updated 4/6/2016
Economic Overview

8. Credit Union Performance: Q4 Version
Updated 4/6/2016
Economic Overview

9. Key General Economy Trends
Review the Recent Data
About Jobs and Consumers
Economic Overview

10. Payroll Job Gain Average is Solid; Unemployment Rate Trending Down
Economic Overview

11. Standard & Broad Rates Both Trending Down
Economic Overview

12. Broad Measure Approaching Full Employment
Economic Overview

13. Washington and U.S. Unemployment Rates
Economic Overview

14. Unemployment Rate and Credit Union Loan Growth
Economic Overview

15. Unemployment Rate and Credit Union Loan Growth
Economic Overview

16. Unemployment Rate and Credit Union Loan Delinquency Rate
Economic Overview

17. Unemployment Rate and Credit Union Loan Delinquency Rate
Economic Overview

18. Where Are Unemployment Rates High?
WA: 4.7%
Economic Overview

19. Where is Labor Market “Risk” Rising?
WA: -90 Basis Points
Economic Overview

20. Consumer Sector Indicators OK
Financial obligations as a share of disposable income have dropped sharply; remain relatively low
Includes debt and rent/lease payments
Low interest rates help
Consumer confidence was roughly flat during ; jumped after election.
Highest levels in a decade, well above recession lows.
Still not back to pre-recession levels.
Economic Overview

21. Credit Union Loan Portfolio: Autos and Homes
Latest: oil 4/4/16; $ 4/1/16
Economic Overview

22. U.S. New Car Sales Strong: Signs of Slowing?
Economic Overview

23. Credit Union Performance: Q4 Version
Updated 4/6/2016
Economic Overview

24. Credit Union Performance: Q4 Version
Updated 4/6/2016
Economic Overview

25. Home Sales Heading Higher
Economic Overview

26. Home Sales Heading Higher?
Economic Overview

27. Home Prices Continue to Rise
Economic Overview

28. Home Prices Continue to Rise
Source: FHFA. Purchase only Price Index (1991Q1 = 100)
Economic Overview

29. Credit Union Performance: Q4 Version
Updated 4/6/2016
Economic Overview

30. Monetary Policy Indicators
Jobs, Inflation, and Interest Rates
Economic Overview

31. Inflation Heading Higher?
Both through February
Economic Overview

32. Fed Dot Chart: Interest Rates Headed Higher?
Economic Overview

33. Credit Union Deposit Rates
Economic Overview

34. Fed Dot Chart: Interest Rates Headed Higher?
Economic Overview

35. Private Forecaster Outlook: Term Spread
Economic Overview

36. Yield Curve is Flattening; Longer End of Short Maturity is Heading Higher
Current yield curve is uniformly below the average, but also steeper than usual.
If we were moving back to , then we have further to go on the short end (almost 300 bp at three months) than the long (less than 200 bp at 10 years.
Economic Overview

37. Consensus Forecast
Consensus forecast for the next year or so is not very exciting.
Economy grows 2-2.5% at annual rate (long-term history is more than 3%, but some slowdown from demographics was likely anyway).
Unemployment steadies at just over 4.5% -- full employment.
Consumer price inflation averages around 2% (oil prices remain a wildcard).
Interest rates move slowly higher – Federal Reserve/private forecaster path.
Sectoral/regional developments may influence credit unions more than national trends.
Economic Overview

38. Risk Scenarios Two Scenarios with Significant Probabilities.
A. U.S. Downturn: Foreign Growth Slowdown – No Replay of Great Recession, tight fiscal policy, trade war
National unemployment rate rises to 7% or so (not 10%)
Inflation stays down
House prices edge down or are flat.
Interest rates stay low. Fed may reduce funds rate.
B. U.S. Economy Picks Up More than Expected: Tax cuts, infrastructure spending, foreign growth recovery
Unemployment declines more sharply than in the consensus.
Inflation moves higher along with oil prices.
House prices continue to rise.
Fed raises funds rate 3 or 4 times. Long rates rise, but not by as much as short.
Economic Overview

39. Washington at Risk Through Foreign Trade
Economic Overview

40. Washington at Risk Through Foreign Trade
Economic Overview

41. Contact Us
Economic Overview

42. Background
Recent National
Credit Union
Indicators
Economic Overview

43. Credit Union Performance Indicators
Credit Union ROAA in Q4,
in Basis points
Source: NCUA Call Reports
Economic Overview

44. Credit Union Performance Indicators
Loan to Share Ratio in Q4, ,
Percent
Source: NCUA Call Reports
Economic Overview

45. Credit Union Performance Indicators
Four-quarter CU Loan Growth Ending in Q4,
Percent
Source: NCUA Call Reports
Economic Overview

46. Credit Union Performance Indicators
Credit Union Loan Delinquency Rate in Q4
percent
Source: NCUA Call Reports
Economic Overview

47. Credit Union Performance Indicators
Credit Union Net Interest Margin in Q4,
YTD, percent of average assets
Source: NCUA Call Reports
Economic Overview

48. Credit Union Performance Indicators
Credit Union Net Worth Ratio in Q4,
percent
Source: NCUA Call Reports
Economic Overview

49. Credit Union Performance Indicators
Credit Union Net Long-Term Asset Share in Q4,
percent
Source: NCUA Call Reports
Economic Overview