Q4 Profile Report: Pandemic not over, but economy is reaching an inflection point

The New York Credit Union Association, in conjunction with CUNA, has released the Fourth Quarter 2020 New York Credit Union Profile report. The report provides relevant and up-to-date analysis of key statistics and trends that impact credit union performance.

As COVID-19 cases surged in the fourth quarter of 2020 and the pandemic’s turbulence was magnified by one of the most divisive presidential elections in history, U.S. non-farm employment increased by 638 million in the quarter ending in December and the headline unemployment rate declined from 7.8% at the start of the quarter to 6.7% by quarter-end, according to the report. New York’s 8.7% unemployment rate remained stable during the quarter.

Highlights from the report include:

Economic activity: Measured by changes in the dollar value of goods and services (or GDP) grew at a historically strong 4.3% rate in the fourth quarter.

Rates: The Federal Reserve federal funds effective rate started and ended the quarter at 0.08%, while the ten-year Treasury yield started October at 0.69% and moved up to 0.93 by year-end.

Home sales: Total home sales (new and existing) were down at an annualized 6.6% pace in the fourth quarter, but mortgage interest rate averages were trending down (finishing the period at an all-time low of 2.81%) and affordability held steady.

Credit union growth: Overall, credit unions experienced healthy, but slower membership growth in the fourth quarter with only modest loan growth and big stimulus-related savings inflows.

Credit card loans: Credit card loans led the way with a quarterly increase of 1.2% (4.8% annualized) reflecting healthy holiday purchases.

First mortgages: Continued low long-term market interest rates pushed first mortgages up 1.2% (4.8% annualized).

Auto, other loans: Used auto loans balances increased in the fourth quarter by 0.3% (1.2% annualized), while new auto loans, commercial loans, personal unsecured and HEL/2ndmortgages outstandings declined in the fourth quarter.

The report stated that, although the COVID-19 crisis is far from over, there are clear signs that the economy is quickly approaching an inflection point. “The promise of herd immunity is helping to boost job market recovery, consumer spending should be firming, and a strong rebound in manufacturing seems to be on the horizon.”

The report was emailed to the main contacts at Association member credit unions this week. For assistance with accessing the reports, contact the Association’s member relations team at member.relations@nycua.org or (800) 342-9835 ext. 8546.

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