Economic recovery is uneven
From left: Jordan van Rijn, CUNA; Dana Peterson, The Conference Board; and Dr. Lindsey Piegza, Stifel

Economic recovery is uneven

‘We need further reopening to allow more expansion to resume.’

May 21, 2021

While the economy is rebounding more quickly than expected, the recovery isn’t benefiting everyone equally and the labor market is recovering in “fits and starts,” two economists told attendees of the 2021 CUNA Finance Council Virtual Conference on Thursday.

Dana Peterson, chief economist for The Conference Board, and Dr. Lindsey Piegza, chief economist for Stifel, speculated on what the months ahead will hold for a variety of economic measures.

Peterson forecasts 6.4% economic growth in 2021, fueled by a strong housing market, consumer spending, and government stimulus funds.

“But there’s still a long way to go as business gets back to normal and vaccines are distributed across the country,” she says. “We’re also seeing inflationary pressures and demand pushing prices upward.”

Piegza agrees. “We’ve seen improvements in everything from housing to consumer spending, but we need further reopening to allow more expansion to resume.”

Several issues they addressed during the session:


Low interest rates and high demand, spurred largely by growth in remote work arrangements and millennial homebuyers, bode well for the housing market.

“Housing will remain a hot market for some time,” Piegza says. “It will take time for the market to cool down, but a weak economy or higher rates could undermine this faster.”

It’s not a housing bubble, adds CUNA Senior Economist Jordan van Rijn, who moderated the session.

“The last housing bubble was based on speculation,” he says. “Mortgages today are very strong.”


Strong demand for goods and services due to the pandemic and insufficient labor to accommodate demand increases have led to higher prices that will remain for 12 to 18 months.

This could lead to stock market volatility depending on the Federal Reserve’s ability to address inflation.

Delinquencies and charge-offs

While credit quality has remained strong at credit unions overall, there’s concern about what will happen when stimulus funds run out and forbearances end.

“Once forbearance is lifted, there probably will be people who are months behind in their mortgages because they didn’t have the ability to pay before the pandemic,” Peterson says.

Plus, certain industries will likely suffer due to changing consumer behaviors, such as retail and commercial real estate. “We may see permanent changes in spending habits, putting pressure on certain segments,” Piegza says.

Labor market

While unemployment has fallen significantly since early 2020, 8.2 million people are still unemployed. Hardest hit are women and minority populations.

“It will probably take a year to 18 months to absorb slack in the labor market,” Peterson says. “Some jobs will simply disappear due to automation, less business travel, and the decline in commercial real estate.”

K-shaped recovery

People who own homes, work remotely, and have retirement plans are doing well, while those who don’t are struggling.

Plus, many women have left the workforce, as most child care and household duties fall on them, Piegza says. “Many women were forced to downshift their careers and labor participation, undoing years of progress.”

Auto lending

A big drop in auto loans occurred at the start of the pandemic, followed by strong demand as fewer people flew and used shared-ride services.

While consumer demand for vehicles remains strong, supply issues and technology chip shortages have caused supply chain disruption.

“Consumers continue to spend, but we should recognize the massive support they’re relying on,” Piegza says. “There have been multiple rounds of direct payments, and consumers have reduced costs due to less activity and forbearance. This is padding the household balance sheet.

“The stimulus is slated to end, and people will have to rely on job and wage growth.”

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