ONTARIO, Calif.–Record-high deposits are poised to finally decline going into summer of 2022 among California’s financial institutions as local households continue drawing down their unprecedented savings to afford the ongoing price inflation for goods and services, according to a newCalifornia Credit Union Industry Snapshot released by the state league.
“What’s more: even as inflation is expected to begin moderating sometime later this year, former workers and recent retirees may start trickling back into the job market at a faster pace this summer, which continues posting a record-high number of employment openings,” the league analysis forecasts. “Some households will decide the way to combat recent inflation going into the second-half of 2022 is to go back to work and recoup household earnings, which might push up the labor force (pool of individuals able and willing to work) closer to its pre-COVID pandemic level.”
The Industry Snapshot noted that headed into second-quarter 2022, workers in the state’s labor market were reaping the benefits of a major historical financial cushion coming out of late 2021 and early 2022, according to the league.
“Local household ‘savings’ in checking and all other combined deposit accounts across California hit their highest levels ever experienced at 279 credit unions headquartered in the state, with this total-deposit figure skyrocketing 37% from pre-pandemic fourth quarter 2019 to fourth quarter 2021,” the league analysis shows.
According to the CCUL, the trend within the state represents an unprecedented two-year increase. By extension, the entire U.S. credit union industry is most likely experiencing this same phenomenon by banking consumers nationwide, the league said in releasing the Snapshot.
‘Interesting Inflection Point’
“As households’ financial flexibility is eroded by inflation and they continue drawing down their deposit savings, some former workers and recent retirees are starting to take note of the healthy jobs market and record-high number of open positions,” said Dr. Robert Eyler, economist for the league. “This summer will be an interesting inflection point as record-high employment openings intersect with persistent inflation costs on households and ongoing ‘recession’ jitters — all against the backdrop of rising short-term interest rates for deposits and lending.”
The league further noted that, putting aside any potential economic recession, Eyler said businesses and policymakers in California can expect the excess demand for workers by employers to continue through 2022 as part of the “shadow effect” of the COVID-19 pandemic and resulting public health policies.
“How employers look for workers going into 2023 will depend on how the national and state economies experience anticipated slower growth with rising global uncertainty and any potential lingering effects of COVID-19,” Eyler said.
Deposits & Loans
According to the league Snapshot, collectively, deposits made by California credit union members rose to $243 billion from $177 billion during the December 2019 to December 2021 period — a statistically significant barometer of local financial and banking activity.
“No other two-year period in recent history has experienced such an unprecedented boost in California credit union deposits by members and households to the tune of a net-positive $66 billion (the 37% growth mentioned above),” the league said.
Altogether in California, credit union members (individual consumers), total loans, and total deposits either remained-at or reached record highs by Dec. 31, 2021 compared to the year-ago period, with 13.3 million members and $154 billion in outstanding loans supporting local consumers and businesses,” the league analysis added.
California is home to 279 credit unions headquartered in 36 counties.
Yes, FOMO is Very Real in this Case!
Don’t forget to check your Spam/Junk email folder if you haven’t been receiving your free, popular and daily CUToday.info news headlines.
And if you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time.
CUToday.info has received very positive response from readers following the move to an improved provider of the daily headlines, but many also noted they did need to go to their Spam/Junk folder and mark it as safe.
The new email solution has not only improved every reader’s delivery experience, but it also features a fresh, new format that is easy to read, especially on mobile devices.
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com