“Nothing terrible, nothing great.”
That’s the U.S. economic outlook, according to economist Elliot F. Eisenberg, who said a recession is unlikely in the immediate future.
The acclaimed economic expert and former senior economist at the National Association of Home Builders shared his insights during a lively general session speech at the CUNA CFO Council Conference in Anaheim, Calif., this week.
Some key points in his prognosis of the economy:
• There is reason for optimism. Americans have growing household incomes and are borrowing more.
• Student loan debt isn’t as big of a problem for credit unions as some think.
He said the amount of student loan debt is a good indicator of borrowers’ internal drive and the quality of the schools they’re attending.
• Auto sales remain fantastic. But sales are not going to get any better.
The economy has worked through the pent-up demand that accumulated when people delayed big purchases during the recession.
Plus, younger people are driving less than previous generations.
• Consumer confidence is fine. People are going to Las Vegas more often—an indicator of increased discretionary spending. Conferences and tourism in Sin City are up.
• The retail sector has recovered but it is no longer the economic bellwether that it once was. More people shop online these days.
“Don’t look to retail sales to say anything about the economy,” he said.
• The labor market is on the mend. Monthly job numbers have been good, he said.
Rising turnover rates are a good sign, but wage growth has been a trickier issue. Wages are not going up evenly across income levels.
Retiring baby boomers also depress numbers.
• Growth in the housing market is slow, but it continues to grow. New household formations have rebounded after dipping during the recession, which increases the need for more homes.
However, two problems are emerging: a lack of housing stock for entry-level buyers and a lack of credit for nonprime borrowers.
• Millennials will drive the housing market in the years to come. They’re a “tsunami wave” for financial institutions. Make your apps good, he urged.
• If you want to worry... The trade deficit is getting worse and manufacturing continues to struggle in the U.S.