Credit Union Trends Report: Chance of double-dip recession still increasing

In its December 2020 Credit Union Trends Report, based on data from October, the eighth full month of the COVID-19 pandemic, CUNA Mutual Group reported that the economy gained 638,000 jobs and the unemployment rate decreased to 6.9%. Third quarter economic growth came in at 33.1%, but fell 2.9% from the third quarter of 2019, according to the report.

During October, credit unions gained 47,000 new memberships and loan balances grew at a 4.4% seasonally adjusted annualized pace, while savings balances rose at a 20.7% annualized pace.

The report also found that:

  • personal income fell 0.7%;
  • personal spending rose 0.5%;
  • consumer prices were unchanged;
  • consumer confidence fell;
  • new home sales fell 0.3%;
  • existing home sales rose 4.3%;
  • auto sales rose 3.5%;
  • home prices rose 1.1%; and
  • the 10-year Treasury interest rate increased 11 basis point to average 0.79%.

The report’s economic forecast has the economy expanding at a 4% annualized pace in the fourth quarter and 2.5% during 2021. Economic output remains 3% below its previous peak attained in the fourth quarter of 2019 and 5% below potential output, according to the report.

The probability of a double-dip recession this winter is rising as the number of daily new COVID-19 cases rises, while potential government mandated shutdowns of non-essential businesses and stay-at-home orders could result in job losses in the first quarter of 2021, the report stated.

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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