2024 Strategic Summit


October 7-9, 2024
La Cantera Resort & Spa
San Antonio, Texas


Summit News

Four Treasury Observations on the Economy

by Catalyst Corporate | Nov 03, 2023

To gain a complete perspective on the economy, it's good to examine a variety of economic outlooks, including those of government economists.

Tara Sinclair is the Deputy Assistant Secretary for Macroeconomics in the Office of Forum-Day-2-TS Economic Policy at the U.S. Department of the Treasury. Sinclair gave this year’s Forum attendees insight into how the Treasury is viewing the economy.

Here are four key insights from her presentation that give us perspective on what credit union members are experiencing across the country.

1. Dramatic recovery from the COVID recession

Rapid economic recovery is a story of learning lessons from the past, according to Sinclair. “We had to avoid the mistakes of the Great Recession that led to that painful, slow recovery.”

“In the Great Recession, state and local austerity was a drag on GDP growth for the first 14 quarters of the recovery.” By looking at the Great Recession and determining where the limiting factors for recovery were, funds could target those factors.

In 2021, the American Rescue Plan specifically allocated “direct fiscal relief” to states and local bodies, to help reduce the drag on economic recovery.

2. Fewer scars from the recession

Typically, even after a “full” recovery, substantial scars remain, but this did not occur to the same extent in the aftermath of the COVID recession.

“Child poverty was cut nearly in half in 2021 to a record low 5.2%,” Sinclair said, attributing this to the expansion of the child tax credit and other policies.

Sinclair shared another example: “Emergency rental assistance programs helped reduce evictions to 20% below historic averages, even after the end of the CDC eviction moratorium.”

3. Household finances that remain strong

“In the first quarter, household net worth was 5.6% above its pre-pandemic trend, while consumer credit growth had cooled off and serious delinquencies among credit card and auto balances had returned to pre-pandemic levels,” Sinclair said.

Labor market improvements also support household finances. According to Sinclair, “Households are still well supported financially due to this constant flow of income from work.”

4. Inflation still the top concern

The metric most felt by members is perhaps inflation, which remains elevated for the 12-month average. Sinclair explained, “When we look at the three-month average of 2.4%, however, it sounds much more in line with the Fed’s target for inflation.”

“Food inflation and energy inflation, both excluded from core inflation, are both trending downward,” Sinclair continued, “despite a slight increase in energy due to the war in Ukraine.”

A primary concern Sinclair discussed that directly impacts members is the rent of housing inflation, which has doubled since 2019.

“Though high, rent of housing is starting to dip, and there’s a lot of very encouraging data to suggest it may continue to decline…. Those rental agreements have already happened, and when you look at new rental agreements, we can see they have cooled considerably. Those should filter into the average rate over time, continuing to bring it down,” Sinclair said.

Looking forward with the Treasury

While there is still a long way to go, Sinclair presented encouraging data. Overall, the economy should continue to recover, but inflation will still be a topic of concern.

However, a strong labor market and cooling inflation should translate into a resilient membership base for credit unions, hopefully indicating easing pressures in the future.

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