Plants in a pot

Guest Commentary: Expect to See a Strengthening Economy

Glen OlpenBy Glen Olpin, Senior Vice President/Chief Economist

Each new year gives us the opportunity to reflect on the financial trends & conditions that have affected the membership over the past 12 months, as well as forecast how these economic factors will impact our operations going forward.

We expect a strengthening national economy this year, improving somewhat from what we experienced in 2016. A recent survey indicates most America First members have a wait-and-see attitude toward economic growth. Only 27% of respondents see an improvement coming, compared with over 30% a year ago. However, since the resolution of the U.S. presidential election, we have seen the stock market accelerate, confidence soar, and small businesses demonstrate higher levels of optimism.

Benchmark interest rates edged up slightly during 2016, and we forecast two to three additional quarter-percent increases throughout the year as the American economy gains momentum.

Utah’s 3.1% unemployment rate is well below the national average of 4.7%. The state also ranks among national leaders in job growth. Nevada’s labor markets were greatly improved, with unemployment levels falling to 5.2%. A large percentage of our members believe their personal employment situations will get better this year.

Consumer spending has expanded, resulting in sustained overall economic growth, even without significant increases in personal income. National retail sales grew more than 4% in 2016.

Personal credit saw faster than 6% growth for the year, while at America First, loan demand has been significant and is expected to continue into the future. Due largely to units moved in December of 2016, new auto sales set an annual industry record. Demand is expected to ease slightly during 2017. As it does, we expect dealer incentives to continue playing a key role in sales growth.

Inflation stayed low, but increasing home values & sales have created strong market conditions. We expect continued housing and construction growth during 2017, even as interest rates rise moderately.

While public uncertainty has to a large extent faded, questions remain regarding fiscal spending, regulatory reform, tax code changes, trade relations, and other issues. Ongoing expectations for positive changes in Washington will likely buoy the economy as it expands.

Regardless of the larger economic environment, all of us at America First are committed to providing you with service excellence, delivering high-quality financial products & services, and establishing lasting relationships of trust.

We appreciate the confidence you’ve placed in your credit union and thank you for your membership.