WASHINGTON—Should a recession occur, credit union won’t feel the effects all that deeply, according to a new forecast from CUNA.
Senior Economist Ligia Vado shared that prediction and made other projections in her October 2022 CUNA Economic Update.
“Members’ healthy financial conditions is one of the most important reasons why, if indeed there is a recession next year, its impact on credit unions will be much less severe,” Vado said
Other points made in the forecast:
- Economic growth predictions. Vado projected that the economy will grow 0.3% in 2022 and no growth in 2023
- Yield curve inversion. “The inversion of the yield curve since July signals a recession within six to 12 months. CUNA forecasts a ‘relatively mild’ recession in the first half of 2023,” she said.
- Pressure on credit union margins. Increased interest rate risk, higher operating expense, reduced consumer spending and lower levels of income from mortgage refinancing will affect bottom-line growth.
The CU View
For credit unions specifically, Vado is forecasting:
- Loans outstanding will grow by 18% by the end of the year, the strongest in over 35 years
- Savings growth will be 3.5% in 2022, among the slowest in the last 40 years
- Record low savings growth and historic loan growth will result in lower credit union liquidity levels and challenges