Labor Market & Consumer Deposits Could Remain Unusual for Extended PeriodFeb 24, 2022 12:00AM ● By By Matt Wyre, California Credit Union League
ONTARIO, CA (MPG) - Recent financial and economic trends exhibited by households, workers, and consumers across the Solano-Sonoma-Napa-Marin Region point to the possibility of today’s historically unusual labor market not reaching some sense of normalcy until sometime between 2023 – 2025, according to the most recent analysis of regional credit union trends and state-level jobs data.
THE LATEST TREND
Going into first-quarter 2022, workers in the local labor market were reaping the benefits of a major historical financial cushion coming out of late 2021. Local household “savings” in checking and all other combined deposit accounts across the Solano-Sonoma-Napa-Marin Region hit their highest levels ever experienced at eight credit unions headquartered across four counties, with this total-deposit figure skyrocketing 46 percent from pre-pandemic fourth quarter 2019 to fourth quarter 2021.
This trend represents an unprecedented two-year increase according to the latest Solano-Sonoma-Napa-Marin Region Credit Union Industry Snapshot report released today by the California Credit Union League.
WHY? A FEW REASONS…
“Just one reason deposits may have risen is because some current and former workers have been concerned with labor market prospects where they live — a situation that’s more tenuous today than 12 months ago,” said Dr. Robert Eyler, economist for the California Credit Union League. “Some people want flexible financial options due to uncertainty and unknowns in their income, even during what is perceived to be a somewhat healthy and growing jobs market.”
Eyler said businesses and policymakers in the Solano-Sonoma-Napa-Marin Region can expect the excess demand for workers by employers to continue possibly into the next few years, which is part of the “shadow effect” of the COVID-19 pandemic and resulting public health policies. Additional underlying reasons for today’s wacky labor force phenomenon also includes:
- A noticeable number of households migrating out of California.
- Some workers retiring throughout the pandemic and not considering rejoining the labor force either part-time or full-time until there is a possible “correction” in the financial/stock market or housing market prices (thus negatively impacting their wealth).
- Some available workers in today’s labor force not having the immediate skills to fill high-demand job positions across a variety of industries.
- Some individuals deciding not to job search or be hired as they face the marginal choice of working versus using childcare or dependent care, as well as concerns over safety at work.
“Each of these issues generally takes years to solve or reverse, and we can most likely assume these themes will continue for the next couple of years at a minimum,” Eyler said. “When it comes to worker and household deposits and savings, these volatilities should eventually diminish if the labor market’s continued job growth starts to increasingly resemble pre-pandemic hiring patterns. Hopefully it will also gradually get easier for employers to find workers as urban and suburban migration trends settle down.”
DEPOSIT & LOAN DATA
Collectively, deposits made by Solano-Sonoma-Napa-Marin Region credit union members rose from $8 billion to $11.7 billion during the December 2019 to December 2021 period — a statistically significant barometer of local financial and banking activity. No other two-year period in recent history has experienced such a boost in Solano-Sonoma-Napa-Marin Region credit union deposits by members and households to the tune of a net-positive $3.7 billion (46 percent growth).
Altogether in the Solano-Sonoma-Napa-Marin Region, credit union members (individual consumers) and total deposits either remained-at or reached record highs by Dec. 31, 2021 compared to the year-ago period, with 617,000 members (consumers) and $8.7 billion in outstanding loans supporting local consumers and businesses. You can view the Solano-Sonoma-Napa-Marin Region snapshot report (web link above) for details on first mortgages, HELOCs/home equity loans, new auto loans, used auto loans, credit card lending, and business loans, as well as checking accounts, savings accounts, money market accounts, certificates of deposit, and IRA/Keogh accounts.