CUNA Mutual Group August Trends Report: Consumer confidence rises


In its August 2020 Credit Union Trends Report, based on data from June, the third full month of the COVID-19 pandemic, CUNA Mutual Group reported that consumer confidence rose as the economy gained 4.8 million jobs and the unemployment rate decreased to 11.1%

The report also found that:

  • personal income fell 1.1%;
  • personal spending rose 5.6%;
  • consumer prices rose 0.6%;
  • new home sales rose 13.8%,
  • existing home sales rose 20.7%;
  • auto sales rose 18.1%;
  • home prices rose 1%; and
  • the 10-year Treasury interest rate increased 6 basis points to average 0.73%.

The report also indicated that credit union loan balances rose 0.5% in June, lower than the 0.7% pace reported in June 2019, due to slower growth in new-auto loans (-0.3% vs. 0.1%) and credit card loans (-0.6% vs 0.6%). June typically records the fastest loan growth of the year, with seasonal factors adding 0.39 percentage points to the underlying trend growth.

Credit union loan balances grew at a 5.6% seasonally adjusted, annualized growth rate in June, significantly below the pace set over the past five years, according to the report. “We are forecasting below trend credit union loan growth for the next few years due to the COVID-9 pandemic, little pent-up demand for durable goods and high levels of labor market uncertainty.”

And with mortgage loans currently making up 44% of all loans and with mortgage balances growing 13.4% during the past 12 months, multiplying these two numbers together contributes 5.9 percentage points to total loan growth, which makes up 92% of the 6.4% total loan growth, the report stated.

The August report also includes CUNA Mutual Group’s latest economic forecast, predicting that:

  • the economy will contract at a 15% annualized pace in the third quarter;
  • the unemployment rate will remain at over 8% during 2021;
  • deflationary pressures will keep the inflation rate around 1.5% during the next 18 months;
  • the Federal Reserve is expected to keep the Fed funds interest rate at 0.1% until the unemployment rate returns to around 5%, likely sometime in 2023; and
  • the 10-year Treasury interest rate will remain below 1.5% until 2022 due to low inflation expectations and massive quantitative easing by central banks around the world.

To view the full report, click here.

The Credit Union Trends Report is a monthly “pulse check” on the state of the credit union marketplace, often placed in a historical context. The report includes data from two months prior and is published and distributed by Steven Rick, chief economist for CUNA Mutual Group. The Trends Report is intended to provide a review and analysis of recent credit union financial performance and operational results in the context of recent economic activity. Data and analysis are provided to establish standards against which credit unions’ own performance can be compared.

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