CUNA economist tells CFA audience, no Chicken Little impressions in economic future

WASHINGTON-While predicting that up to another one million Americans could find themselves out of work over the next few months, CUNA Vice President of Economics and Statistics Mike Schenk told attendees at the Consumer Federation of America (CFA) conference in Washington, D.C. November 29, unemployment probably will not reach the highs it did in 1990. “From the standpoint of unemployment, it appears as though this recession may be a bit milder than the last one we had,” Schenk said. He explained that unemployment rates might extend upwards of 7%. However, Schenk cited a recent CFA/CUNA study on holiday spending, which indicated that consumers feel better about their financial position than they did a year ago in the same study. While bankruptcy experts have presented pessimistic economic projections, according to Schenk, he feels that bankruptcy levels may have been raised artificially high this year due to increased attorney advertising encouraging indebted consumers to file before Congress acts on the reform legislation. The bankruptcy reform legislation, like many other matters on Capitol Hill, has been held up in the aftermath of September 11. He admitted bankruptcy filings would hit new records this year. “The slow down will have a financial effect on credit unions, but overall, consumers have done quite a bit to fix their balance sheets,” he said. Even so, at credit unions, the charge-off rate could double from 0.4% to 0.8%. Schenk pointed out that still indicates that 99.2% of credit unions’ member loans will be paid off rather than 99.6%. He added that less than 1.5% of consumers will file for bankruptcy this year, which means 98.5% of consumers will continue to pay on their debts. Schenk concluded, “I don’t see the sky falling.” [email protected]