Why The Economy Is Still Bumping Along The Bottom

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SAN ANTONIO-Recessions are typically described as either "U" shaped or "V" shaped. But the economy of the past few years has been more of a "lumpy L," according to CUNA Mutual CEO Jeff Post.

"We came down and now we're just kind of bouncing along the bottom," said Post, who offered a view on the economy to NASCUS' annual meeting.

Post framed his remarks around four themes: housing, employment, credit losses and debt. Here's what he had to say about each:

• Housing. Post noted there remain more negative pressures on housing than positive, and noted there has even been recent discussion of 0% interest rates would be possible. "Total delinquencies were at 13.97% at the end of Q2. With foreclosures continuing and inventories still high there's a real concern that values will continue to decline," said Post. "Credit union members are affected in another way-many were counting on their home equity to contribute to their retirement. In the future, that may not be an option."

• Unemployment: "Only when there's a consistent increase in employment will we see improved home sales and starts. Until companies have more confidence in the future, employment will continue to be a challenge," Post said.

• Credit losses. "We don't see a lot of loss provisions coming down for credit unions," Post said. "An astonishing $1.3 trillion of consumer debt is delinquent."

• Debt. There is some good news, observed Post, noting personal debt has declined to about 120% of personal income from a high of 135%. "The problem is that 80% of that decline is on the backs of their financial institutions."

"It's almost an unprecedented opportunity if we have the capital to deploy," said Post. "We need to get capital into the system and deal with ability to grow. This is a great opportunity to clarify your strategy and what sets you apart."

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