Bill Handel

2018 was a good year for the economy generally and for the financial services industry.  We experienced reasonably good GDP growth, especially in the second and third quarters, and we spent the entire year at an unemployment rate of 4% or lower.  In the financial services sector, loan growth continued at a strong pace, to the point that many financial institutions are facing liquidity concerns and for the first time in over a decade are engaged in deposit wars.  Earnings also improved for the majority of financial institutions, a result of improving net interest margins helped by four rate

In a not unexpected development, the Federal Reserve raised short term interest rates again at its Wednesday meeting this week.  This is the ninth rate hike since December 2015, and the fourth in 2018.  At the meeting, the Federal Reserve also indicated that the pace of rate increases is likely to slow in 2019.  What this means exactly is not certain, but the likelihood of four or even three rate increases in 2019 is not high.  In fact, 11 of 17 officials expect no more than two rate increases next year.

Early in 2017 we compiled our predictions for the upcoming year.  These were a mix of economic and industry predictions.  How accurate were these predictions? 
As it turns out, we were mostly on the mark in our predictions, at least in terms of direction if not always in magnitude.  Here is a review of our 2017 predictions and an assessment of the accuracy of each.

Raddon held its first-ever national research conference in Chicago November 6-8.  The three day event was attended by over 250 C-level and marketing professionals from banks and credit unions across the United States, and the content featured Raddon’s own proprietary national consumer and small business research as well as several very informative keynote speakers and panelists.

While the election in November and resulting change in administration has been polarizing politically, it has simultaneously triggered a degree of enthusiasm among investors, consumers and small businesses.  This optimism is not seemingly driven by improvement in current economic activity, but instead seems to reflect a sense of greater optimism for the longer term. 

Here at Raddon, we like to build segmentation schemes.  Splitting large populations into smaller groups helps to improve marketing by allowing institutions to speak to audiences in a more targeted way.

For example, from our previous Strategic Planning Study Group research, we’ve known for a long time that high earners – our Upscale Segment – bank differently than others.  They tend to invest more, are more likely to use major banks, and they are less likely to use debit cards.

What a difference a couple of months can make.  In the aftermath of the election, we have seen the stock market accelerate, consumer confidence soar, and small businesses assume a much greater level of optimism.  We have seen the Fed announce a significant change in its interest rate policy.  Due largely to December sales volume, 2016 was the single biggest year in new auto sales history.  In general, we are experiencing a sense of optimism we haven’t seen in nearly a decade.

Now that 2015 is in the rearview window, it’s time to review how well Raddon fared in our annual economic predictions. How accurate were the predictions we made at the start of the year?

2014 proved to be an interesting year, both from an economics standpoint and from the perspective of the financial services industry. What’s on the horizon for 2015? This article will preview The Raddon Report’s predictions for the coming year.