Office of the Chief Economist Report
MODERATE PACE OF RECOVERY CONTINUES
DURING THE FIRST QUARTER OF 2012
The economy continued to recover at a moderate pace in the
first quarter of 2012, providing modest support for further
strengthening of credit union financials. First-quarter
employment gains were a bright spot in the economy.
Monthly payroll job gains averaged about 230,000 over the
first three months of 2012, the most in any quarter since
From February 2010, when jobs began to recover, payrolls
have increased by 3. 7 million. Even so, they remain 5 million
below their level when the recession started in December
2007. Other first quarter indicators underscored the more
modest underlying pace of the recovery. Economic growth
measured by real GDP slowed from a 3 percent annual rate
for the fourth quarter of 2011, to 2. 2 percent for the first
quarter of this year.
Income growth did not keep pace with a solid gain in
consumer spending, so some of the spending gains came at
the expense of savings. The housing sector remained weak.
Home sales were flat; weak demand and distressed sales kept
house price measures in check or pushed them lower. Recent
monthly data suggest the pace of recovery will remain
moderate at best in the near future. In April, employment rose
115,000 well below the first quarter average. The
unemployment rate ticked down to 8. 1 percent.
Impediments to faster growth are centered in potential
international developments. Geopolitical concerns helped
push crude oil and gasoline prices higher during the first
three months of the year which hurt growth. Elevated gas
prices remain a risk going forward. U.S. exports to Europe
will slow as the area falls into recession. A more severe
European recession or a disorderly default in European debt
markets would negatively spill over into U.S. credit markets
Credit unions are likely to face a general economic
environment that provides modest support, but risks to the
overall economy’s health also pose risks for credit unions.
Each month NCUA’s Office of Chief Economist provides an
economic update available on NCUA’s YouTube channel:
CDRLF GRANTS IN ACTION (FROM PAGE 8)
“The proceeds of this grant have improved the operations of the credit union by
streamlining our check processing system, including the check return process,
through our utilization of Check-21 technology.”
RAFE Federal Credit Union used a CDRLF grant to secure a laser check printer and
capture system. The change did away with duplicate checks that had been costly
to print. The credit union is also able to utilize blank stock for credit union checks.
The implementation of Check-21 technology allowed for cost savings by
discontinuing the courier service between the main office and the branch facility.
The need to purchase deposit bags, deposit slips, and related items is now history,
as are the costs. Now that deposits clear through their bank on the same day, the
credit union has seen a much faster turn-around time for returned deposits. The
new system also improves teller accuracy and end of day balancing. These benefits
will remain with the credit union for many years to come.
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