CUNA News
  • LOG IN
  • Create Account
  • Sign Out
  • My Account
  • LOG IN
  • Create Account
  • Sign Out
  • My Account
  • Topics
    • Community Service
    • Compliance
    • Credit Union Hero
    • Credit Union Rock Star
    • Credit Union System
    • Directors
    • Human Resources
    • Leadership
    • Lending
    • Marketing
    • Operations
    • Policy & Issues
    • Sales & Service
    • Technology
  • Credit Union Magazine
    • Buyers' Guide
    • COVID-19
    • Digital Edition
    • Credit Union Hero
    • Credit Union Rock Star
    • Subscribe
    • Advertise
    • Contact
  • Advertise
  • Awards
    • Nominate Credit Union Hero
    • Nominate Credit Union Rock Star
  • Podcasts
  • Videos
  • Jobs
  • Contact

News

Home » Economists ‘unsure about the future’
Leadership

Economists ‘unsure about the future’

Traditional clues about the economy are breaking down.

October 21, 2019
2 Comments
Mike Schenk

Economists have a wide variety of metrics they typically use to gauge the future. But creating a 2020 economic forecast has proven to be the “diciest” yet for several reasons.

“In some important respects, we’re more unsure about the future than we’ve ever been,” says Mike Schenk, CUNA’s deputy chief advocacy officer and chief economist. “What makes the economy tick and the relationships we rely on for clues as to where the economy is going seem to be breaking down.”

Schenk provided an economic forecast at the 2019 CUNA Roundtable for Board Leadership in Phoenix.

While CUNA economists don’t expect a recession before 2021, Schenk can’t pinpoint an exact date as to when the next recession will take place. When it does occur, however, he expects it to be short and shallow and nowhere near as damaging and disruptive as the Great Recession.

While economists still analyze historically important economic relationships, Schenk says four factors are having a big impact on current economic forecasts:

1. Politics

Politics is having an outsize impact on international economic systems and financial markets. Schenk says the uncertainty and volatility brought on by the increased use of social media may be the new norm, and it will affect political and economic discourse and behavioral norms in the future.

This heightened uncertainty and volatility has a direct impact on business confidence, generally reducing overall investment activity. Plus, it threatens to have more obvious and similar impacts on consumer purchases and borrowing.

2. Demographics

Birth rates directly affect labor market growth, and the birth rate has steadily fallen to 11.8 live births per 1,000 in 2018—half the level seen in 1960. At the same time, the U.S. population is aging, with 15.4% now 65 or older, almost double the reading in 1960.

These trends, combined with related lifestyle changes, are having a stronger and more direct impact on consumer purchases and borrowing than previously assumed.

3. Technology

Advances in technology are having large effects on labor market composition and frequency of job disruption. That’s likely to become more pronounced in the future.

As a result, members experience less job security and more income variability. The effects of automation have been seen for decades in declining manufacturing employment, and the so-called “Amazon effect” is obvious in today's retail jobs data, Schenk says.

4. Consumer financial health

While 75% of people now report they are “living comfortably” or “doing OK,” Schenk says 39% still don’t have $400 saved for an emergency and 25% don’t have a retirement or pension plan. Income inequality—gaps due to generations, education, and race—are at a 50-year high and trending up.

That’s shocking against the backdrop of a 3.5% unemployment rate, fast-rising wages, and the longest economic expansion in modern U.S. history.

“These trends are putting more substantial strain on economists’ ability to rely on traditional economic relationships and tried-and-true metrics—making it more difficult to peer into the future than at any time in the recent past,” Schenk says.

KEYWORDS economy

Post a comment to this article

Report Abusive Comment

Credit Union Magazine: Winter 2022

Winter 2022

Credit Union Magazine’s Winter 2022 issue highlights data-driven marketing, the board’s role in cybersecurity, elder abuse scams, credit unions’ auto lending advantage, and more.
Digital Edition •  Subscribe

Trending

  • House passes CUNA, League-led board modernization bill

  • Reps introduce bipartisan Credit Union Board Modernization Act

  • What workers want

Tweets by CUNA_News

Polls

Vote for the 2023 CU Hero of the Year

View Results
More

Champion for the Credit Union Movement

Credit Union National Association is the most influential financial services trade association and the only national association that advocates on behalf of all of America's credit unions. We work tirelessly to protect your best interests in Washington and all 50 states. We fuel your professional growth at every level and champion the credit union story at every turn.

More CUNA

  • Membership
  • Contact Us
  • Careers

Resources for

  • Credit Union Advocates
  • Leagues
  • Press
  • Providers

Our Affiliates

  • American Association of Credit Union Leagues (AACUL)
  • Credit Union Awareness
  • Credit Union House
  • CUNA Strategic Services
  • National Credit Union Foundation
GET CUNA UPDATES
© 2023 Credit Union National Association | ADA Compliance Notice & Legal
Email Us