ARLINGTON, Va. -
At least one analyst believes that probability has "waned a bit."
"I don't think the Federal Reserve will sit idly by and allow a recession, said Dr. Tun Wai, chief economist and director of research for NAFCU. "Because inflation was a little bit lower, there is room for the Fed to take over."
Although Wai feels confident that the chance for a recession "has dropped a little bit," he cautioned that it's still too early to rule out the possibility.
"I'm one of those economists who made that prediction," joked Dave Colby, chief economist for CUNA Mutual Group, Madison, Wis., referring to forecasts of a coming recession.
Colby said he expects to see consumers cutting back on "nice-to-have expenditures."
"Let's wait a couple of months and see what happens," he said. "Consumers might take a break. We'll see what happens during the holiday season. It's going to take a lot of serious enticement to get us in there."
Steve Rick, senior economist for CUNA in Madison, Wis., agreed, predicting a 51% chance for a recession. "It's slightly more likely than not," he said, adding that home prices falling and oil prices rising will only contribute to the likelihood.
Tim Sciborski, vice president of lending for 75,000-member Community First Credit Union, Appleton, Wis., said he agrees that real estate and vehicle sales will "still be off next year." He also attributes oil sales and the election to contribute.
"I think next year is going to be a tough year to get people to borrow money," he said. "I think it's going to be tougher than last year-2009 might be a good year for lending, but not 2008."
But that said, Sciborski feels that credit unions are in a good position. "People are tightening on credit quality, but we haven't changed a bit," he noted, adding that it may actually be an opportunity for credit unions to prove their value. "Mortgage, finance companies are going out of business. Our real estate delinquencies are higher but it's nothing credit unions can't absorb. This is an opportunity to let people know we're still doing real estate loans and we have changed the way we're doing business."
It's a sentiment shared by Doug True, vice president of FORUM Solutions, in Fishers, Ind.
"We're seeing this time as an opportunity," he said. "Other places are closing. Just look at credit unions-we feel we still want to do loans to our members."
Brandon Michaels, vice president of finance for the San Francisco Fire Credit Union, said he agrees with the recent economic predictions of a recession. He also doesn't expect to see the light at the end of the tunnel anytime soon.
"With the dollar declining against major other currencies, as well as the dollar being the benchmark for many currency-priced products and services, as well as the current status of the housing market, I do not see the economy growing for much longer," he said.
All that, coupled with the dollar being low, and therefore investors wanting a higher return, Michaels also predicts effective rates increasing.
"The Fed can lower the short term, but that is one interest rate out of hundreds," he said. "I do not think the housing market effects have been fully realized yet. That will have a greater drag on the economy than what was originally predicted."
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