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The 2012 Economy: ‘Good, Not Great’

CUs should prepare for 'painfully slow' loan growth.

March 21, 2012
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Barring any major shocks, the U.S. economy should experience gross domestic product growth of 2.5% in 2012, which is “good, but not great,” NCUA Chief Economist John Worth said Tuesday afternoon.

He and CUNA economists Bill Hampel and Mike Schenk participated in a panel discussion examining the 2012 economic outlook.

Boding well for the economy is an improving jobs picture. The nation’s unemployment rate fell from 8.9% in October to 8.3% today, and should reach 8.1% by year’s end.

Plus, household finances are improving, Hampel said, with higher savings levels, a lower debt burden, an improving stock market, and a “long, slow improvement” in home prices.

Three potential “shocks,” however, could negate these positive economic trends:

  1. Europe’s financial crisis could harm economies worldwide;
  2. Spiking oil prices could dampen consumer confidence and spending; and
  3. Another debt ceiling crisis could damage consumer confidence as it did in 2011.

 Potential disasters aside, credit union balance sheets have experienced “an amazing turnaround,” albeit a slow one, Schenk says.

 This year he says credit unions can expect:

  • “Painfully slow” loan growth (4%);
  • Savings growth of 5%;
  • “Eye popping” improvements in asset quality;
  • A huge inflow of new members, creating excess liquidity issues;
  • A big earnings rebound despite corporate credit union assessments; and
  • A modest increase in interest-rate risk due to large amounts of long-term, fixed-rate loans held in portfolio.

 Large credit unions are in better financial shape than their smaller brethren, Schenk added, with higher loan growth and better asset quality.

 “The bottom line: We’re in a much better place today than one year ago,” Schenk said, “but significant challenges remain.”

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Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

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