Credit Unions Report California's Economy Continuing Strong Recovery

ONTARIO, Calif., Aug. 26, 2013 /PRNewswire/ -- A new California Credit Union League report shows lending at the state's credit unions increased by 1.3 percent in the second quarter—making it the fastest second-quarter loan balance increase since the beginning of the recession in 2007.  Automobile financing led the way with a 7.8 percent first-half jump in new vehicle loans, and a 6.3 percent increase in used vehicle loans. Unsecured personal loans also grew relatively quickly—jumping by 1.8 percent in the first half.

"It's clear the reports of California's heating up weren't a flash in the pan," said League Chief Economist Dwight Johnston. "This improved economic outlook is building consumer confidence with near-record increases in new loan applications for big-ticket items ranging from homes to cars."

Helping drive demand for new vehicles, many Californians have returned to work in 2013. The state's unemployment rate dipped to 8.5 percent at the end of the year, which while still elevated, represents a decline of nearly a percentage point in the quarter and of 1.3 percentage points since the start of the year. Also, California home prices increased by 5 percent in the first quarter and by 17 percent in the year ending in March—the most recent data available for the Federal Housing Finance Agency purchase-only index.

Meanwhile, statewide personal bankruptcy filings declined by 26 percent in the first half compared to year-ago levels according to the Administrative Office of US District Courts.  And California credit union borrower-bankruptcy filings declined even faster—by nearly 31 percent—in the same time period.

Despite the increased spending, the report found Californians continued to save. Credit union savings balances grew 3.0 percent in the first half and by 3.2 percent in the year ending June 2013. With historically low market interest rates consumers continue to focus on building short-term liquid accounts:

• The state's credit unions report regular savings account balances grew by 6.9 percent in the first half
• Checking account balances grew by 5.4 percent
• Money market balances grew by 1.4 percent

The League's report is compiled from credit unions representing 53 percent of all federally-insured credit unions that collectively serve 96 percent of the members and manage 98 percent of the assets reported by such institutions located throughout the state. 

SOURCE California and Nevada Credit Union Leagues