The economy is now in its ninth year of recovery—the third longest expansion in U.S. history. But that doesn’t mean a recession is looming, says Bill Hampel, CUNA’s chief economist and chief policy officer.
“The economy is showing no sign of aging,” Hampel told CUNA Economics & Investments Conference attendees in Las Vegas. “This recovery was unusual because it was much slower than most post-war recoveries. People were very cautious. We’re limping up to a full economy, not booming through it.
“But think about what you were doing in your credit union eight or nine years ago,” he adds.
While there are some warning signs—the approach of full employment and heightened uncertainty on public policy—“we’re good for the next couple of years.”
If President Trump implements his agenda of tax cuts, increases in infrastructure spending, and immigration reform, it would stimulate the economy for the next two to three years, Hampel says.
But cutting back on immigration would retard long-term economic growth because it would reduce the available labor force, he says.
“We need more labor force growth to grow the economy,” Hampel says. “We have a shortage of labor. And we need millennials to start having kids.”
The economy currently is growing at a 2% to 2.5% clip due to improved household finances, low debt payments, the stock market recovery, strong job market income gains, “skyrocketing” consumer sentiment, and a continued backlog of major purchases, such as automobiles.
“The Great Recession lasted so long, people didn’t replace major items,” Hampel says. “There’s still some demand backlog and a willingness to spend.
“This all looks really good for the economy and for credit unions. People put off car purchases, which is good for auto loans now. We’ve moved back to more balanced loan growth.”