IDAHO FALLS – Amid a rising federal interest rate, inflation and other economic woes, Zions Bank regional president Catherine Arik says the banking industry is strong.
Arik, a Salt Lake City native who was named the regional president for the eastern Idaho and Wyoming areas in August, made a trip to Idaho Falls last week on the heels of the company’s 150th anniversary. We sat down with her in the EastIdahoNews.com studio to discuss how national financial issues are impacting the local banking industry.
As of Nov. 1, the federal reserve interest rate is between 5.25% and 5.55% — the highest it’s been since 2001, according to a recent banking industry report.
While the economic outlook is uncertain right now, Arik tells EastIdahoNews.com the federal interest rate was three times higher in the 1970s and 80s.
In an effort to combat inflation, the U.S. central bank reportedly manufactured a recession in 1980 and the federal interest rate soared to 14.6%. Later that year, it rose two percentage points between 19 and 20%.
“Thank goodness it’s not that high,” Arik says. “Consumers are still spending and the labor market is very resilient.”
Arik touts the efforts of Zions Bank in alleviating people’s concerns when it comes to getting a loan. Zions Bank is a preferred lender with the Small Business Administration, which Arik says allows the bank to provide longer-term loans with a lower monthly rate.
“It lowers their monthly payment so it keeps cash in the businesses,” she says. “It also allows for more flexibility on collateral and equity requirements. Zions is really invested in communities that we serve and so we’re looking for ways to get capital out to business owners and consumers.”
Still, national spending remains a source of uneasiness for some. The national debt continues to skyrocket as Congress pushes for more foreign aid.
Since the Russia-Ukraine conflict began in Feb. 2022, the U.S. has sent more than $75 billion in aid to the eastern European country, according to the Council on Foreign Relations.
Last month, President Biden requested $106 billion in emergency foreign aid to Ukraine’s defense against Russia’s invasion, Israel’s response to Hamas’s attacks and to counter Chinese influence in the Pacific.
As the federal deficit now surpasses $33.7 trillion, the House is pushing for $14 billion in budget cuts, while also passing legislation on Thursday that approves sending about the same amount in aid to Israel.
The U.S. inflation rate — the percentage in which goods and services increase in price over a year — is 3.7%, as of Sept. 2023, compared to 3.67% in August and 8.2% last year. This is higher than the long-term average of 3.28%.
A year after President Biden sold the final batch of oil reserves, shrinking the remaining stockpile to its lowest in 40 years, many are concerned about America’s increased dependence on imports and its effect on fluctuating fuel prices that could result in costs rising even more.
All of these things make it harder for the average person to save money, one of the biggest concerns for Zions Bank customers.
Despite this, Arik says people should focus on “what they can control” and offers a few pointers to help people feel more financially secure.
“People need to save money as they can and control their spending,” says Arik. “Limit the discretionary (funds) they’re spending on things like streaming services.”
Arik says one of the best ways for people to save for an economic downturn, control their spending and know where their money is going is by creating and following a budget. She’s a huge proponent of this simple strategy and says many people don’t do it.
She points to several data points she finds “encouraging” during a financially turbulent time. For example, Arik says national GDP has risen from -.6% last year to 2.1%.
She provides some reassuring data for the Gem State as well.
“Unemployment rates in the state of Idaho are 3.1%. In the nation, it’s $3.8%. Idaho is … the third most friendly state for small business startups. Personal income is up 9.6%,” she says. “I think things can bog us down and we can get caught up in the minutia of everything but if we look at what’s really going on, it’s a little more encouraging and is not so bleak.”