ARLINGTON, Va.–One economist agrees with NCUA Chairman Todd Harper that there continues to be reason to be wary of the “economic fallout” from the pandemic even as the economy is well on its way toward recovery.
As CUToday.info reported, Harper said during an event hosted by NAFCU, “In general, economic growth is expected to be solid through the remainder of this year and into next year, with shrinking unemployment rates and strong GDP growth. Despite the improving outlook, credit unions may still face a difficult environment for the foreseeable future."
NAFCU Chief Economist Curt Long agreed that being cautious is advisable.
“I think the message of staying vigilant is a good one,” he said. “Credit unions certainly need to be aware of these issues as they come down the pike, especially in the mortgage arena.”
Long pointed to the most recent NAFCU Economic Monitor survey in which its member CUs were asked about the expiration of mortgage foreclosure moratoriums and the effects they expect those to have on their portfolios.
“Credit unions were pretty sanguine about (potential effects),” said Long, noting the effects can be different from state by state. “There were a handful that had concerns” but most CUs are not concerned.
Loan Demand
Also, in that same Economic & CU Monitor report, NAFCU found credit union leaders in the survey indicated they expect loan demand to slow as 2021 progresses.
“I think loan demand is starting to taper a bit. I think you see that in homes,” said Long, citing a broader cooling in the market. “There is still plenty of demand out there for the supply we have. We’re also seeing that with auto loans as car loan demand starting to cool just a bit. But it’s not something to be really concerned about. Credit unions are still sitting on a ton of cash right now without a lot of investment opportunities. So, it bears watching.”