HOUSEHOLD FINANCES FROM THE CREDIT UNION VANTAGE POINT By Curt Long, NAFCU Chief Economist and Vice President of Research THE BOTTOM LINE A mystery that has confounded economists in 2023 is that the economy appears to be objectively improving, and yet consumer sentiment remains stubbornly low. One effort to square the circle has been to argue that while aggregate data may show advances, those gains have failed to reach the median household. In particular, this argument asserts that low-income Americans— beset by inflation, rising debts, and dwindling savings—are falling further behind. Central to these debates is a lack of timely, granular data on household finances. Each side can point to supporting but not dispositive data. Rising revolving debt and delinquencies could reflect financial hardship, or it could simply be part of a normalization process as historic levels of government intervention recede further in the rearview mirror. On the other hand, there is evidence that real wage growth has actually been strongest among low-income workers1 and that while household liquid savings may have dipped in late 2022, it has since rebounded and particularly so for the lowest-income households.2 Share growth series reflect 3-quarter moving averages of quarterly growth rates, adjusted for seasonality. The bars represent the LICU growth rate minus the non-LICU growth rate. Sources: NCUA, NAFCU Research Share Growth: LICUs vs Non-LICUs 20% 15% 10% 5% 0% -5% -10% 4% 3% 2% 1% 0% -1% -2% 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 LICU Non-LICU Diff’ce: LICU minus Non-LICU (right axis) 10 THE NAFCU JOURNAL November–December 2023
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