CUNA Mutual Group Trends Report: GDP expected to flatline in 2023

In its January 2023 Credit Union Trends Report based on data from November, CUNA Mutual Group reported that it is currently forecasting real gross domestic product to flatline in 2023 with essentially no growth, which is below the long-run average of 2% growth rate.

The Federal Reserve is expected to raise interest rates another 50-75 basis points to reduce inflationary pressure this year. “And so, the question on the mind of many credit union leaders is when the next recession may take place,” the report states. “We believe the economy could experience a mild recession in the second half of 2023 as consumers’ excess savings has been eliminated by higher spending on higher priced goods and services by this summer.”

Other factors contributing to the recession are higher interest rates, lower stock and home prices, and satiated consumer demand for many durable goods, according to the report.

The report also stated that credit unions of all sizes reported strong loan growth during the last 12 months. Credit union loan balances rose 1.2% in November, above the 0.7% pace reported in November 2021. Driving overall loan growth was strong growth in credit card loans (2.6%), adjustable-rate mortgages (2.4%) and home equity lending (2.1%).

Other highlights from the report:

  • Credit union consumer installment credit balances rose 0.3% in November, below the 1.0% jump set in November 2021.
  • New auto loan balances rose at a 20.1% seasonally adjusted annual rate in November, significantly above the double-digit pace set during 2012-2018.
  • Credit union fixed-rate first mortgage loan balances grew 0.8% in November, below the 1.3% pace set in November 2021.
  • Credit union members have an average of $2,609 more in their savings balances today compared to two years ago, a 24% increase.
  • Credit union loan delinquency rates will rise to 0.75% in 2023 from 0.56% today.
  • Credit union memberships grew 231,000 in November, or 0.17%, which is below the 320,000 new members, or 0.24%, that were added in November 2021.

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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