His answer, in short, was that, yes, stuff happened. But much of the economic damage from the initial edicts has since been reversed.

What remains is uncertainty, he said during his comments at the quarterly Trendwatch webinar by Callahan & Associates, the credit union company in Washington, D.C.

That uncertainty extended from the Fed’s hesitation to touch rates to CFOs at credit unions who are paid to worry but are stumped about what to worry about the most.

Haley’s advice to them was to worry about the risk of interest rates rising, or “being higher for longer.” And it would behoove them to be “a lot more focused on disciplined risk management.”

“What that means to me running a financial institution is now I have to be much more rigid in my risk management framework because when rates are whipping around, pricing assets properly is more challenging,” Haley said.

“We've had a lot more discussion with our clients over the last year, but especially recently, on using interest rate derivatives as well to hedge risk when you're in a more volatile environment where rates can chew up all your profits really quickly,” he said.

Consumer sentiment has soured since the start of the year, but Haley said he’s more interested in what consumers and business leaders are doing than what they’re saying about how they’re feeling.

“Despite all the noise, the economy has been on pretty solid footing leading up to all this,” Haley said. “Household balance sheets in particular had been relatively strong for the most part.”

In particular, liquid assets, which include deposits and money market funds, rose 13% to 35% from the fourth quarter of 2019 through the fourth quarter of 2024 for 80% of households after adjusting for inflation. But not for households in the bottom 20% of income brackets: Their liquid assets fell 21%.

“That's where we're seeing more of the issues in credit, whether it be subprime autos or personal loans and other securitized credit you're probably experiencing in your own institutions and balance sheets,” Haley said.

“Household credit in general looks pretty good in most measures because so many people have mortgages at less than 4% rates, which is their biggest liability. But there are some pockets of concern,” he said.

Some of that household distress has shown up in high auto loan delinquencies, but last year it also began showing up in mortgage delinquencies, particularly for 2021-2022 vintage FHA loans, typically for first time home buyers. Many of those homes were bought at peak prices, and borrowers are now getting slammed by higher charges for homeowners insurance and taxes.

“If you've got 30% equity in your house, you're going to do a lot of things before you hand the keys over,” Haley said. “But if you have 5% or less or you're basically flat, that's a whole other story.”

Contact Jim DuPlessis at [email protected].