Discover How Today’s Economy Will Affect Your Future

Wayne Best, Senior VP of Business Research and Reporting, Visa USA

Visa’s alliance with Experian has allowed it to access and analyze data that provides valuable insights into the economy, according to Best. “The rise in unemployment rates signals a recession, but we expect it to be of short duration, and end this summer.” And while high gas prices are expected to consume a greater percentage of consumer spending, he notes that the country is using less gas than in the past and the weak US dollar is creating growth in exports.  Tax rebate checks will also help the economy, he notes, since traditionally most of these checks will be spent almost immediately. 

While the recession may be relatively short lived, the economy cannot fully recover until the housing market is restored, he notes. “Housing prices have not yet hit bottom. We are predicting a 20% decline nationwide due in part to the bloated supply of homes available. The housing surplus is the highest in two decades of record-keeping, and some markets have a 10-month supply of new and existing homes.”

He does not expect house prices to stabilize until the second quarter of 2009.

And while recent news reports have focused on the effect of subprime loans, Best called upon attendees to examine credit card balances and 30 day delinquencies for signs of trouble. “Consumers are using their credit cards to stay current on their mortgage payments. Outstanding balances for prime cardholders for 2005/2006 have increased to $4,500. Half of these cardholders are 30 days late on payments, as compared to a 20% rate for subprime cardholders.” 

Despite this gloomy outlook, he said credit unions have the opportunity to expand in the credit space and gain market share. “Unemployment rates remain relatively low, just 2% for college graduates, so there are opportunities to service members and make money without undue risk.”