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CUNA Inflation continued to its rapid rise in November, leading a CUNA economist to predict the Fed will start to tighten its monetary policy in the first half of next year. The U.S. Bureau of Labor Statistics reported Friday that the Consumer Price Index rose 0.8% from October to November after seasonal adjustments, down slightly from the 0.9% gain in October. Prices over the past 12 months are up 6.8%. “Inflation continued to surge in November,” Dawit Kebede, a CUNA senior economist, said. “Supply chain disruptions, higher demand for goods that continue to exceed pre-pandemic levels and increases in COVID-sensitive items such as shelter contributed to the rise.”   In previous months, the Federal Reserve had been focused on supporting maximum employment and considered inflation spikes to be transitory due to supply chain issues. “Now the Fed seems to be concerned with stabilizing prices since COVID-related disruptions may not ease up soon,” Kebede said. “There are expectatio...

A major shift is underway at the Federal Reserve to begin to remove the central bank’s massive pandemic easing policies, and could see it hike rates sooner than is priced in by markets. Comments by Fed officials suggest the central bank is likely to decide to double the pace of its taper to $30 billion a month at its December meeting next week. Initial discussions could also begin as soon as the December meeting about when to raise interest rates and by how much next year with Fed officials set to submit a fresh round of economic forecasts and projections for the fed funds rate. There is no consensus yet on when to begin hikes, but it’s clear that the faster taper is designed to give the Fed flexibility to raise rates as soon as the spring. The markets do not appear to expect the first rate hike until the summer. St. Louis Fed President James Bullard said Friday he wants asset purchases to end in the first quarter so the Fed can position itself “soon” and make every meeting “live” for ...

FT. LAUDERDALE, Calif.–There is new pressure on credit unions to provide benefits plans to senior executives as the Great Resignation remains the new reality in the employment landscape, according to a trio of experts. Speaking to NAFCU’s CFO Conference, the three experts, all of whom are with executive benefits consulting firm Gallagher, outlined what they are seeing and why when it comes to recruiting and retaining leadership. Addressing the meeting were Liz Santos, chief of staff in the executive benefits practice, VP Tyler Talbot and Relationship Manager B.J. Burt. According to the trio, executive benefits plans are not just about retaining C-suite leaders but also can and should be used to drive performance. Nonqualified benefit plans are a specialized tool for highly compensated execs and staff that bridges the gap between 401(k) and other retirement options, the audience was told. They can be tailored to any credit union’s needs, they added. “When properly designed they can mit...

  AWRENCEVILLE, Ga.—Is there no end to the road when it comes to rising used car values? There doesn’t seem to be, as used values continued there march upward in November, with the Black Book Used Vehicle Retention Index reached another record high. Black Book reported the Index increased to 189.9 points, a 9.7 point (or 5.4%) increase from October (180.2). The Index currently stands 45.4% above where it was this same time last year. “With no short-term resolutions to new inventory problems, dealers are continuing to spend money on used inventory, pushing wholesale prices up to new records across all segments in November,” said Alex Yurchenko, chief data science officer at Black Book. “Cars of all sizes and vans had the largest increases as used and new inventory in those segments declined to much lower levels compared to other segments of the market. We expect the used car prices to increase again in December but at a much lower rate as the volume of new inventory is starting to...

MADISON, Wis.–It’s a key question in front of many within credit unions as both decision-makers and consumers: “What can we expect for long-term interest rates during the next five years?” CUNA Mutual Chief Economist Steve Rick has offered his view as part of the latest Trends Report released by the company. “As the economy recovers over the next few years and inflation runs above the Federal Reserve’s 2% average target, we can expect the 10-year Treasury to increase from 1.5% today to 3% by 2026,” Rick stated. “Moreover, the recent announcement by the Federal Reserve that they have begun to taper their quantitative easing program--printing up money to buy Treasury bonds and mortgage-backed securities--by $15 billion each month will increase long-term interest rates over the next year.” So, what impact will this have on credit unions? Rick pointed to the chart, below, which he noted shows the strong correlation between the 10-year Treasury interest rate and credit unions’ yield on as...

Weekly News Summary Here are some things that were in the news last week. Please share these articles with your Supervisory Committee and Board of Directors. If you missed previous editions of the weekly news, summaries of those can be viewed at our archive . Have a great week! Mike Richards, CPA Economic and Industry Issues Knowledge is the key to effective corporate governance. Staying abreast of economic and industry issues affecting your credit union will prepare you for those responsibilities. Welcome to the PSCU Payments Index Read More New NAFCU campaign, ‘Stop Big Bank Bullies,’ calls out banking industry misconduct Read More Regulatory and Accounting Issues Regulatory and accounting issues are changing all the time. Staying abreast of those changes is an important part of the corporate governance. Federal Credit Union Meeting Flexibility in 2022 Due to the COVID-19 Pandemic Read More FASB reconsiders accounting for troubled debt restructuring by creditors R...

ARLINGTON, Va.—New-home sales saw a slight increase of 0.4% in October to 745,000 annualized units, while prior months saw a downward revision of 75,000 units. Compared to last year, October sales were 23.1% lower, according to new data. Curt Long “New home sales advanced by a modest amount in October, and those gains were swamped by downward revisions to prior months,” said NAFCU Chief Economist and Vice President of Research Curt Long. “The initial September sales estimate was downgraded from 800,000 to 742,000 units.” October sales in the Midwest rose by 11%, followed by the South (+0.2%). Other Census regions saw a dip in new-home sales including the Northwest, which fell by 11.8%, and the West, which dropped by 1.1%. Based on current month sales, the new federal data show there were roughly 6.3 months of supply in October, up by 0.2 months compared to September. Unsold homes left on the market increased by 10,000 homes to 389,000 in October, representing a 37% increase from yea...

Misperceptions are steering consumers toward non-bank payment apps, but CUs can win them back, new Javelin research finds. Getting paid and paying others in real-time is a benefit that consumers want in their lives. But they may not fully understand what real-time payments are, how they work or who actually offers them, according to a new white paper produced by Javelin Strategy & Research and commissioned by the Brookfield, Wis.-based core processor and fintech Fiserv. That’s keeping credit unions and other financial institutions from reaching their full potential in the real-time payments services space, according to the paper, as consumers’ misperceptions are steering them toward nonbank payment apps such as PayPal’s Venmo and Square ’s Cash App. The white paper, based on a June 2021 survey of 3,711 consumers, revealed that 60% of people do not believe that “real-time payments” are truly instantaneous, mistakenly thinking that “money will not be available for hours or even days...

WASHINGTON–Three federal bank regulatory agencies today issued a statement summarizing their interagency "policy sprints" focused on crypto-assets and providing a roadmap of future work related to crypto-assets. The Federal Reserve, the FDIC and the Office of the Comptroller of the Currency noted that the statement specifically describes the focus of the preliminary work conducted through the sprints undertaken by the agencies. It also summarizes the agencies' plan to “provide greater clarity throughout 2022 on whether certain crypto-related activities conducted by banking organizations are legally permissible, and related expectations for safety and soundness, consumer protection, and compliance with existing l...

ARLINGTON, Va.—Waiting on housing market conditions to change before taking the plunge on a new home? You might want to find a comfortable chair in your current abode, according to one analyst, who said the market is likely to remain frothy for some time to come. Curt Long    Existing home sales rose 0.8% in October to a seasonally adjusted annual rate of 6.34 million units, a 5.8% decrease in sales versus a year ago. NAFCU's Curt Long noted that sales “marched on in October” following the rise in September. "Outside of last winter's surge which made up for missed sales following COVID-19's arrival, present sales are at their highest level since 2006," said Long, NAFCU's chief economist and vice president of research. "According to Freddie Mac, the average rate on a 30-year mortgage increased by 17 basis points in October, but that has not made a meaningful dent in sales." Sales rose in two regions this month. The Midwest saw the largest rise, ga...