SIFMA survey looks at GDP, unemployment, and inflation

SIFMA’s biannual survey of U.S. economists highlighted some key economic trends, including a rising gross domestic product (GDP), lower unemployment, and inflation.© Shutterstock “As the economy recalibrates to a new post-pandemic equilibrium, we can expect to see at least temporary higher prices across multiple segments in inflation indexes, but the real question is whether inflationary […]

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SIFMA’s biannual survey of U.S. economists highlighted some key economic trends, including a rising gross domestic product (GDP), lower unemployment, and inflation.

© Shutterstock

“As the economy recalibrates to a new post-pandemic equilibrium, we can expect to see at least temporary higher prices across multiple segments in inflation indexes, but the real question is whether inflationary pressures will prove temporary or underlying,” said Lindsey Piegza, chief economist at Stifel Financial and chair of SIFMA’s Economic Advisory Roundtable. “For the foreseeable future, this unknown will be the focus both for the market and policymakers.”

The chief U.S. economists from 27 global and regional financial institutions who took part in the survey expect real GDP growth to finish 2021 at 7.5 percent, followed by a 3.1 percent increase in 2022. On a quarterly basis, respondents forecast 10 percent real GDP growth in the second quarter, followed by 7.9 percent and 5.6 percent growth in the third and fourth quarters, respectively.

The economists said additional fiscal stimulus, faster opening of U.S. economy, and larger consumer spending could spike the numbers while lingering COVID restrictions and lockdowns, labor supply constraints, and higher inflation were downside risks.

Further, the economists expect unemployment to drop to 5.2 percent at the end of the year, down from its current 5.8 percent level. In 2022 they expect to see it drop to 4 percent.

As for inflation, the respondents expect the CPI (consumer price index) to end 2021 at 3.8 percent, while the core CPI will be at 2.9 percent. Those numbers are up from 1.2 percent and 1.6 percent, respectively, last year. However, the vast majority, 88 percent, believe current inflation pressures are temporary/transitory, while 81 percent are confident the Fed can achieve its 2 percent average inflation target in a sustainable way.

The survey was conducted between May 17 and June 3. All of the findings can be found on the SIFMA website.

SIFMA is the leading trade association for broker-dealers, investment banks, and asset managers operating in the U.S. and global capital markets

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AICPA survey examines economic optimism

Findings from a recently released American Institute of CPAs (AICPA) survey showed business executives are expressing optimism with regard to economic recovery in the coming year not witnessed since 2018.© Shutterstock The second-quarter AICPA Economic Outlook Survey gathered feedback from chief executive officers, chief financial officers, and other certified public accountants in domestic firms possessing […]

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Findings from a recently released American Institute of CPAs (AICPA) survey showed business executives are expressing optimism with regard to economic recovery in the coming year not witnessed since 2018.

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The second-quarter AICPA Economic Outlook Survey gathered feedback from chief executive officers, chief financial officers, and other certified public accountants in domestic firms possessing executive and senior management accounting roles.

Polling was conducted from April 27 to May 24, 2021, and included 770 qualified responses from CPAs in leadership positions, per the AICPA.

“What we’re seeing is a broad expectation that things will really open up in the second half of the year,” Ash Noah, vice president and managing director of CGMA learning, education, and development for the Association of International Certified Professional Accountants, said. “Many issues remain, of course. Supply chains are still straining to meet demand in a number of sectors. The global response to the pandemic still contains many uncertainties, which impacts the United States. But we are clearly seeing growing confidence on the part of business executives that the worst is behind us.”

Half of business executives expressed optimism about the global economy, representing an increase from 37 percent last quarter; companies’ input prices are predicted to increase by 4.4 percent over the next 12 months – a rise from last quarter’s forecast of 3.1 percent; and prices executives expect their companies to charge are expected to rise 2.7 percent within the same timeframe – a boost from 1.8 percent.

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NCUA: Community Development Revolving Loan Fund positively impacts on communities, credit unions

National Credit Union Administration (NCUA) officials are espousing the benefits of the Community Development Revolving Loan Fund (CDRLF), noting its positive impact on low-income credit unions, members, and communities nationwide.© Shutterstock In its report to Congress, NCUA requested lawmakers consider increasing the fund’s 2022 appropriations. “Since its creation, the Community Development Revolving Loan Fund has […]

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National Credit Union Administration (NCUA) officials are espousing the benefits of the Community Development Revolving Loan Fund (CDRLF), noting its positive impact on low-income credit unions, members, and communities nationwide.

© Shutterstock

In its report to Congress, NCUA requested lawmakers consider increasing the fund’s 2022 appropriations.

“Since its creation, the Community Development Revolving Loan Fund has been an efficient and effective program for targeting public resources to do public good,” NCUA Chairman Todd M. Harper said. “Because demand regularly exceeds the amount of available funds for these grants and because low-income credit unions are more likely to serve communities disproportionately impacted by COVID-19, I urge Congress to increase appropriations for CDRLF grants in 2022.”

Harper indicated more funding would allow the agency to increase the number of credit unions receiving grants while increasing the size of the grants it makes, thereby deepening the program’s impact in underserved communities.

Last year the NCUA devoted nearly all its CDRLF resources to aid credit unions and members meet the varied COVID-19 pandemic challenges. Overall, the NCUA received 432 technical assistance grant and loan requests for a total of $7.6 million.

The agency was limited to awarding $3.7 million in technical assistance grants and loans to 165 credit unions, per the NCUA report. In addition, the agency awarded 149 credit unions in 42 states and the District of Columbia more than $968,000 in urgent need grants.

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CFPB examines risks, barriers to manufactured housing loans

Consumer Financial Protection Bureau (CFPB) officials have issued a report examining manufactured housing financing, noting low acquisition costs present higher interest rates and limited opportunity to refinance. © Shutterstock “This report shows the power of the expanded Home Mortgage Disclosure Act data collection to understand the path to homeownership for some of our most vulnerable […]

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Consumer Financial Protection Bureau (CFPB) officials have issued a report examining manufactured housing financing, noting low acquisition costs present higher interest rates and limited opportunity to refinance.

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“This report shows the power of the expanded Home Mortgage Disclosure Act data collection to understand the path to homeownership for some of our most vulnerable families, including Black, Indigenous, and Hispanic families, as well as rural and lower-income families of all races and ethnicities,” Acting Director Dave Uejio said. “Much more work needs to be done to understand the options available to these families and how best to help ensure that manufactured housing homeownership can be a path to financial stability for the rural and lower-income families who depend on it.”

According to the CFPB, manufactured housing represents a small segment of the overall housing supply. Still, it is one of the most affordable housing types available to low-income consumers, making up 13 percent of the housing stock in small towns and rural America.

Officials indicated 42 percent of manufactured home purchase loans are categorized as chattel loans, secured by the home but not the land. Additionally, officials said chattel loans have higher interest rates and fewer consumer protections than mortgages.

Chattel loans are often selected by consumers to avoid putting the underlying land at risk if there is a loan default. Most manufactured home loan applications are denied, and less than 4 percent of chattel originations were for refinances.

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American Property Casualty Insurance Association assesses 2020 amid pandemic

American Property Casualty Insurance Association (APCIA) officials have offered an assessment of 2020 amid the COVID-19 pandemic, noting property/casualty insurers weathered a turbulent year.© Shutterstock “Insurers’ net income and net written premium growth declined in 2020 as the industry was hit by the pandemic and severe natural catastrophe losses,” Robert Gordon, APCIA senior vice president, […]

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American Property Casualty Insurance Association (APCIA) officials have offered an assessment of 2020 amid the COVID-19 pandemic, noting
property/casualty insurers weathered a turbulent year.

© Shutterstock

“Insurers’ net income and net written premium growth declined in 2020 as the industry was hit by the pandemic and severe natural catastrophe losses,” Robert Gordon, APCIA senior vice president, policy, research and international, said. “Investment yields fell to the lowest level since at least 1960. Insurers eked out a $5.1 billion underwriting gain on more than $650 billion of NWP after reserve releases, although that gain may not reflect the potential of significant long-tail losses from COVID-19. The drop in personal lines combined ratio is reflective of the drop in the personal auto combined ratio which is largely due to a temporary reduction in miles driven.”

Gordon acknowledged that while personal auto writers provided various rebates and significant rate reductions, the severity of claims continued to climb significantly, and miles driven increased in 2021.

APCIA officials indicated the analysis jointly prepared with Verisk (VRSK), a leading global data analytics provider, showed
private property/casualty insurers’ net income after taxes decreased 2.9 percent to $60.1 billion last year from $61.9 billion in 2019.

Additionally, insurers’ rate of return on average policyholders’ surplus fell to 6.8 percent from 7.8 percent in 2019, detailing insurers provided roughly $11.5 billion in premium relief to policyholders despite reporting a 5.6 percent decrease in net investment income caused by the lowest investment yield since 1960.

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Nearly $77B net income reported for FDIC-insured commercial banks, savings institutions in first quarter 2021

Per the Federal Deposit Insurance Corporation’s (FDIC) First Quarter 2021 Quarterly Banking Profile, FDIC-insured commercial banks and savings institutions recorded a net income of $76.8 billion.© Shutterstock The amount reflects an increase of $58.3 billion from a year ago. “Despite continued challenges, the banking industry remains resilient,” FDIC Chairman Jelena McWilliams said. “Strong capital and […]

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Per the Federal Deposit Insurance Corporation’s (FDIC) First Quarter 2021 Quarterly Banking Profile, FDIC-insured commercial banks and savings institutions recorded a net income of $76.8 billion.

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The amount reflects an increase of $58.3 billion from a year ago.

“Despite continued challenges, the banking industry remains resilient,” FDIC Chairman Jelena McWilliams said. “Strong capital and liquidity levels support lending needs and help protect against potential losses.”

The analysis showed the net income also represented an increase of $17.3 billion from fourth quarter 2020. The aggregate negative provision expense enhanced quarterly and annual net income growth.

The report also showed 75 percent of all banks reported annual improvements in quarterly net income, and the share of unprofitable institutions dropped from 7.4 percent a year ago to 3.9 percent. The average net interest margin contracted 57 basis points from a year ago to 2.56 percent, signaling the lowest level on record for the Quarterly Banking Profile. Community banks reported annual net income growth of $3.7 billion, supported by an increase in noninterest income and a decline in provision expense.

The FDIC indicated three new banks opened during the quarter, with 25 institutions merging. No banks failed during the quarter.

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Sen. Brown seeks cryptocurrency bank charter reviews

Senate Committee on Banking, Housing and Urban Affairs Chairman Sherrod Brown (D-OH) is encouraging the Office of the Comptroller of the Currency to review varied cryptocurrency bank charters.© Shutterstock In correspondence to Acting Comptroller Michael Hsu, Brown requested an analysis of charters granted to several cryptocurrency exchanges by the Trump administration – detailing what Brown […]

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Senate Committee on Banking, Housing and Urban Affairs Chairman Sherrod Brown (D-OH) is encouraging the Office of the Comptroller of the Currency to review varied cryptocurrency bank charters.

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In correspondence to Acting Comptroller Michael Hsu, Brown requested an analysis of charters granted to several cryptocurrency exchanges by the Trump administration – detailing what Brown described as the risk of granting charters to non-banks and the need to ensure consumers and the banking system are protected.

“I am concerned about a number of national trust charters granted by the prior leadership of the OCC,” Brown wrote. “Shortly after former Acting Comptroller Brian Brooks left the OCC to join Binance, a cryptocurrency exchange, several nontraditional firms that specialize in digital and cryptocurrency activities – including Paxos, Protego, and Anchorage – received conditional national trust charters from the OCC.”

Brown maintains the OCC is not able to regulate the entities comparably to traditional banks, considering the uncertainties present in the digital asset landscape identified by other regulators, the volatility of digital asset valuations, and the disproportionate influence individuals can have on entire cryptocurrency markets.

“It is also unclear whether the OCC engaged in the appropriate due diligence to stand behind this ‘seal of approval’ before granting these charters,” Brown concluded. “Former Acting Comptroller Brian Brooks actively encouraged cryptocurrency companies to apply for a national trust charter because it had ‘relatively easy requirements’ and is ‘just a faster charter to get.’ Not only could these charter approvals lead customers to underestimate the risks related to these assets, but it could undermine faith in the safety and stability of the entire banking system.”

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CUNA report explores unbanked/underbanked dynamic

A recent Credit Union National Association (CUNA) report examines the chief reasons for individuals being unbanked/underbanked and offers recommendations regarding the circumstance.© Shutterstock The analysis outlines obstacles and viable solutions for improving financial inclusion while also identifying the chief reasons individuals are unbanked/underbanked. “This research underscores how important it is to remove barriers to financial […]

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A recent Credit Union National Association (CUNA) report examines the chief reasons for individuals being unbanked/underbanked and offers recommendations regarding the circumstance.

© Shutterstock

The analysis outlines obstacles and viable solutions for improving financial inclusion while also identifying the chief reasons individuals are unbanked/underbanked.

“This research underscores how important it is to remove barriers to financial access for the unbanked and underserved,” Ryan Donovan, CUNA chief advocacy officer, said. “For over 100 years, America’s credit unions have promoted thrift and provided access to credit for provident purposes. We look forward to working with policymakers to apply these findings and explore meaningful solutions that improve financial well-being for everyone.”

Methods of addressing the challenges, per the report, include ensuring access to verifiable identification; encouraging recipients participating in direct payment government benefit programs to open basic, low-cost accounts; the use of public policy to encourage public/private partnerships as a means of continuing to innovate and meet the changing needs of households and individuals; and encouraging the financial services industry to continually embrace approaches with a proven track record of success.

The report has also recommended continued examination of factors contributing to the decline in the unbanked rate for Black and Hispanic households from 2015 to 2019. Credit unions should promote financial well-being and community advancement as an extension of its congressional mandate.

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OCC report examines pandemic’s impact on federal banking system

The Office of the Comptroller of the Currency (OCC) recently released a report examining the COVID-19 pandemic’s impact on the federal banking system and highlighting various risks.© Shutterstock The Semiannual Risk Perspective for Spring 2021 highlighted credit, strategic, operational, and compliance risks among the prime themes, noting banks maintained solid capital and liquidity levels, but […]

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The Office of the Comptroller of the Currency (OCC) recently released a report examining the COVID-19 pandemic’s impact on the federal banking system and highlighting various risks.

© Shutterstock

The Semiannual Risk Perspective for Spring 2021 highlighted credit, strategic, operational, and compliance risks among the prime themes, noting banks maintained solid capital and liquidity levels, but profitability continues to be stressed because of low-interest rates and decreased loan growth.

The analysis showed, per the OCC, credit risk is elevated and transitioning amid the current economic downturn – which plays a role in some borrowers’ ability to service debts; assistance programs and federal, state, and local stimulus programs have suppressed past-due levels; and strategic risks associated with banks’ management of Net Interest Margin (NIM) compression and efforts to improve earnings is on the rise.

The findings are based on Dec. 31, 2020, data. The report presents information about the operating environment, bank performance, special topics in emerging risk, trends in key risks, and supervisory actions.

Additionally, authorities noted the report focuses on issues posing threats to financial institutions subject to OCC regulations and seeks to serve as a resource to the industry, examiners, and the public.

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Federal Reserve report examines pandemic financial challenges

The Federal Reserve Board’s recently released report examining the Economic Well-Being of U.S. Households in 2020 examined financial challenges encountered amid the COVID-19 pandemic. In the fourth quarter of the year, the report showed that nearly 25 percent of adults said they were worse off financially than a year earlier. The result stemmed from the […]

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The Federal Reserve Board’s recently released report examining the Economic Well-Being of U.S. Households in 2020 examined financial challenges encountered amid the COVID-19 pandemic.

In the fourth quarter of the year, the report showed that nearly 25 percent of adults said they were worse off financially than a year earlier. The result stemmed from the pandemic’s economic fallout.

The survey of over 11,000 adults, which draws on the Federal Reserve Board’s Survey of Household Economics and Decisionmaking (SHED),
was conducted in November of last year, officials said, adding it provided insight regarding how individuals fared eight months after the pandemic.

“This new survey gives us valuable details about the financial challenges families have faced during the pandemic,” Federal Reserve Board Governor Michelle W. Bowman said. “Even as the economy has improved, we can certainly see that some are still struggling, especially those who lost their jobs and those with less education, many of whom fell further behind. Helping families and communities was a central goal of the Federal Reserve’s response to the pandemic, and the SHED is providing valuable insight into the successes and ongoing challenges of Americans as they continue to experience its effects.”

The report addressed emerging issues born of pandemic-related disruptions and provided insights regarding how people viewed longer-run financial circumstances, particularly related to education, housing satisfaction, and retirement savings.

The report, downloadable data, data visualizations, and a video summarizing the survey’s findings can be found on the agency’s website.

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