MADISON, Wis.– It was an unusual May for credit unions economically, and it could have implications further down the road—but what those implications are remains uncertain.
As CUToday.info reported here, credit unions saw slower loan and membership growth during May, according to CUNA. But many credit unions may not realize just how surprising the May numbers were, according to Mike Schenk, deputy chief advocacy officer for policy analysis and chief economist for CUNA.
The data are a “somewhat surprising continuation of really strong savings growth at credit unions,” said Schenk. He noted May’s 1.3% savings growth was the fastest one-month gain of any May since 2008. On the flip side, loan growth came in at .6%, noted Schenk.
“That’s the weakest loan growth we have recorded in May 2011. That has implications for CU earnings and membership,” he said. “The membership numbers were the weakest since 2014.”
The good news, said Schenk, is that year over year loans are still up 6.8%, while savings are up more than 7%. CUNA is forecasting 7.5% growth for loans in 2019, and 6% growth for savings.
‘This is a Reversal’
“The unusual thing about these developments is that normally loan growth is very, very strong by the second quarter, and savings growth very weak,” said Schenk. “This is a reversal. We’re seeing a slower economy and a retrenchment in the consumer sector. But we’re going to stick by our forecast despite these numbers we see in May in part due to the backdrop of the June jobs report, which showed growth of 225,000 jobs. Wages are up more than 3% and continue to grow faster than inflation, and debt levels remain quite strong, according to the Fed numbers. The consumer sector really is in good shape, despite the fact we’re seeing this unusual activity.”