INDIAN WELLS, Calif. - The global economy is "doing very well," and, despite what people might have heard or read recently, the U.S. economy is in good shape, also.
That was the message from Jeff Thredgold, president of Thredgold Economic Associates in Salt Lake City, Utah. Thredgold told attendees of the CUNA Lending Council conference here inflation fears-and, therefore, the possibility of more interest rate hikes-have been overblown by the press.
"Tell your members to ignore the national news media's focus on the negative," he told the audience during a general session. "Bad news sells newspapers and drives ratings, so that is what goes out. The reality is, the economy is doing very well. We are near full employment, and the gains in recent years have been in quality jobs. The lowest gains have been in the worst jobs."
Inflation pressures escalated quickly earlier this year, especially oil prices, he recounted. But, in the past three months, the price of oil and overall inflation diminished sharply. Thredgold said competition, informed consumers and technology-driven productivity increases would keep prices down.
As a result, he said, despite the calls by some for the Federal Reserve Board to raise the Federal Funds rate to fight inflation, the consensus of most economists is no interest rate increases for the end of the year and through the first quarter of 2007. A rate cut is a possibility in the second quarter next year. Long-term rates have peaked and will be slightly lower in the next six to 12 months, he predicted.
Of particular interest to credit unions, Thredgold said, is a coming labor crunch.
He said the concept of retirement at age 65 will disappear as the baby boomer generation grays ("one boomer hits 60 every eight seconds"), but the term "bridging" will change the workplace.
"People will want to keep one foot in the workplace," he explained. "They will work flextime, part-time, perhaps do some consulting. There will be an incredible shortage of skilled labor."
This shortage already is evident in a lack of qualified nurses, truck drivers and construction workers, Thredgold said.
A tight labor market will enhance compensation and benefits, but he said credit unions must recognize a change is taking place, treat employees better, and keep their quality people.
Another thing credit unions should spend less time worrying about, he said, is taxation. Thredgold said politicians are in the business of making sure they get reelected. Credit union taxation only would raise a few million dollars-a tiny piece of a multi-trilion-dollar U.S. economy-but would upset 87 million credit union members.
"Credit union taxation won't happen," he said flatly.
