CUNA is now America's Credit Unions.
A stronger voice to advance the credit union industry.
If to travel is to live, Dawit Kebede is rich in longevity.
Kebede served as a researcher and professor in his native Ethiopia before studying in Norway and landing in Madison, Wis., for a Ph.D. and, ultimately, his new role as senior economist at Credit Union National Association.
Kebede spoke with Credit Union Magazine about his new position, how he’ll conduct research supporting credit unions’ advocacy priorities, and his outlook for the U.S. and global economies.
Dawit Kebede: I’m originally from Ethiopia, born and raised in the capital city, Addis Ababa. Previously I worked in academic institutions and a research organization called Innovations for Poverty Action.
In grad school, I worked as a teaching and research assistant at the University of Wisconsin-Madison, where I received a master’s and Ph.D. For the past three years I worked at CUNA Mutual, where I was part of the data science and analytics team.
A: My primary responsibility is to conduct research that supports our advocacy work, particularly about how credit unions contribute to members’ financial well-being. I’ll also be engaged in educating credit union leaders about the economy and how it’s impacting credit unions.
A: The pace of economic recovery in terms of the rise in gross domestic product makes me optimistic. Economic growth has been strong—close to pre-pandemic levels. With increased vaccinations and the subsequent decline in infections, the economy has opened.
People are hoping to return to normalcy and they’re willing to spend. There is evidence of increased personal consumption expenditures. We see rising prices relative to last year mainly driven by auto prices and demand in travel and related activities—which in a way is a sign of recovery. However, inflation will only be temporary.
But what concerns me is vaccine hesitation now in some parts of the country and the rise of the delta variant. The COVID-19 variants could potentially reduce the efficacy of the current vaccinations, which could set us back to the beginning. That could reverse everything.
I also have concerns about disruptions in the supply chain that will make it difficult to fulfill increases in demand as the recovery continues.
A: These supply disruptions mean more inflation expectation and rising prices. In general, this could lead to more demand for credit to finance big purchases or other expenses by members.
But when we think about inflation, we need to look at it from the overall recovery. Inflation in the face of stagnant wages could create a bad outcome for credit union members.
We expect loan growth to increase as the recovery continues. People were saving more during the pandemic. Demand is increasing and, as a result, we saw a slight increase in loan growth during the first quarter of this year. We think loan growth by the end of the year will be the same as in 2020 before we hit our long-run average in 2022.
A: The main impact is on the labor market. Before the pandemic, there was a big discussion regarding how automation is changing the labor market in the U.S. and even globally. The pandemic only accelerated this automation process.
We still have high unemployment numbers compared to pre-pandemic levels, but companies in many sectors are reporting unfilled positions, mainly in retail and service industries. This may induce a sense of urgency on part of employers to speed up the automation process. This could displace more workers, resulting in higher unemployment.
The other is increased inequality. The pandemic hasn’t affected everyone equally. Some have seen their wealth and income rise during the pandemic while others were left behind. We’ll need to address this widening inequality.
A: The biggest concern right now is the pandemic. We have made significant improvements in the last six months in the U.S. in curtailing the impact of the pandemic. However, there is a huge inequality across countries in terms of these efforts.
A good example is the delta variant, which started in India and currently is the most dominant variant in the U.S. This shows that we cannot fight this alone. We must control this outbreak globally, not just locally.
That’s a huge concern, but I hope countries will come together. There are already some initiatives. The U.S. is working through the World Health Organization to expand vaccinations to other areas. If we don’t control the pandemic globally, we may go back to square one.
A: I became a credit union member the first week I arrived in the U.S. One of the first things I did was to open an account at UW Credit Union, first with checking and savings accounts, but now I get my loans there, too.
I’m so happy I joined the credit union movement, where the core principles are not for profit, member-owned, and all about service.
A: That we introduced coffee to the world.
A: People who are successful have more grit than talent. To become successful, passion and perseverance are more important than talent. The key determining factor for success is how perseverant and how passionate you are about what you want, regardless of talent.
Don’t be complacent, even if you’re naturally smart. You have to work for it. I always try to remember that and live by this advice.