Wage Led Growth Good For Credit Unions And The Macro Economy

Decent Essays
Wage-led growth good for credit unions and the macro economy
2016 opened with stock markets in turmoil, news on the slowing Chinese economy, and oil prices falling below $30 a barrel. Credit unions have concerns on how these affects their operations.
Concerned investors overreacted to the news of a slower Chinese economy, which partly explains the stock market turmoil in the U.S. and around the world. China’s economy is not immune from the business cycle. Its economy’s growth rate eventually came down from the double digits to the single digits as it undergoes structural changes. China is shifting from an export-led to a domestic consumption driven economy. Since 1976, the beginning of China’s journey towards integration into the global economy, annual GDP growth averaged 9.5%. Since 2012, growth has been below average falling to 6.8% in the fourth quarter of 2015. While it can be argued that China’s economic slowdown has both direct and indirect effects on the U.S. economy through trade and financial flows, a slowing Chinese economy has marginal effects on credit unions. Moreover, it is difficult to aggregate the effects of China’s economic slowdown in future U.S. economic growth.
Unlike banks, credit unions have limited exposure to the ever present daily gyrations in the stock market. The stock market turmoil in January was not a viable indicator of a U.S. economic slowdown. The stock rout was a result of investors’ reaction to further declines in oil prices, strength
Get Access