By all accounts, the U.S. economy is on the mend. Third-quarter GDP growth of 3.5% and the Federal Reserve's ending of quantitative easing both point to a strengthened economic environment that can now take care of itself.
But the picture may not be as rosy as it seems.
As Fed Chair Janet Yellen noted last month, when it came to economic growth, not all U.S. consumers were healing at the same rate and to the same degree, and many clearly were still struggling.
The growing inequity signals both an opportunity and an obligation for the nation's credit unions.
"The extent of and continuing increase in inequality in the United States greatly concern me," Yellen told attendees Oct. 17 at the Federal Reserve Bank of Boston's Conference on Economic Opportunity and Inequality.
"It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority," Yellen added. "I think it is appropriate to ask whether this trend is compatible with values rooted in our nation's history, among them the high value Americans have traditionally placed on equality of opportunity."
Historical values notwithstanding, the larger question may be what the widening U.S. wealth gap will mean to average consumers' financial wellbeing, as well as the country's sustained ability to continue competing in the global marketplace.
Credit unions and their members are not immune to the trend's economic and social fallout. But in some ways their role in serving primarily middle-class and lower-income people puts them on the right side of the gap in terms of their social mission and potential to prosper.
"Credit unions have never had the facility for serving the growing number of billionaires," said William Myers, director of NCUA's Office of Small Credit Union Initiatives and former president of Alternatives Credit Union, a community development credit union based in Ithaca, N.Y. "The wealthy 1% are not credit union members, but it's the other side of the market that's exciting for us."
The opportunity to serve a growing number of people puts credit unions in a pivotal position not only now but as that gap continues to widen, according to Myers. It's a chance for credit unions to live their philosophical underpinnings in ways and to degrees they may not have anticipated.
"We should be concerned about the weakness of the economy and wealth disparity, but as businesses this is a nice opportunity to help people," Myers said. "When you move into this market, the net benefit to members skyrockets, and for credit unions who feel their social mission closely this is a great place to be."
Read more about the expanding wealth gap and its effect on credit union members in the Nov. 19 issue of Credit Union Times.
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