ARLINGTON, Va.—NAFCU Chief Economist and Vice President of Research Curt Long is anticipating negative GDP growth for the year and a rise in the unemployment rate to 6%, on average, for the year.
“Once the data are released, we believe it will show that three-million people claimed unemployment this week. That is unlike anything we have ever seen in terms of the pace of layoffs,” said Long, citing data from NAFCU’s Economic & CU Monitor report. “Our forecast for unemployment is an average over the year, so it assumes the unemployment rate doubles, at a minimum, and it may reach levels seen during the Great Recession.“
Additionally, the Monitor surveyed credit unions on recent changes to interchange revenue, card processing arrangements, and card-related fraud prior to the declaration of a national state of emergency and the country began experiencing impact from a developing pandemic.
The survey found half of respondents characterized their interchange revenue over the past three years as increasing, with a quarter reporting it had decreased and a quarter reporting there had been no change.
Trends in Card Fraud
Respondents also shared general observations regarding trends in card fraud, reporting that online or card-not-present fraud was the most problematic for their credit union and reports of wire related fraud was nonexistent. Responses were largely consistent with the historical trends documented by the Federal Reserve in its 2018 payments fraud study, Long said.
“The data collected might serve as a useful comparison in future months, as storefronts and retail establishments have begun closing their doors to enforce social distancing protocol and consumers shift to card-based transaction to fulfill their shopping needs from home,” Long said.
Also included in the latest Monitor are results from the Credit Union Sentiment Index (CUSI), an index based on NAFCU member responses to eight questions on growth and earnings outlook, lending conditions and regulatory burden.
The CUSI was unchanged in March, reflecting that any anxieties related to the coronavirus impact are yet to appear in the survey. However, there was an overall sentiment that low interest rates will weigh on earnings in 2020. This will likely impact smaller credit unions the most, as they rely heavily on net interest earnings, Long said.