WASHINGTON–With 2023 nearly here, numerous economic soothsayers have gazed into their crystal balls, read the tea leaves, and interpreted the tarot cards and offered their views on what the year will hold for the economy, lending, consumer behavior and more.
Below, CUToday.info has aggregated some of our reporting as a reminder of the trendlines and what some are saying CU leaders need to prepare for in the new year.
Loans Forecast to Continue Growing in 2023, But So Will CUs' Cost of Funds
MADISON, Wis.–Lending at credit unions should grow 8% in 2023 with the average loan-to-savings ratio to 80.5% at year’s end, according to the forecast in CUNA Mutual’s new Trends Report.
The findings come as auto lending at credit unions remains in the left lane, with used car balances growing at the fastest pace on record, according to the November Trends Report, which is based on CU performance data through October.
CUs Will Have to Continue to Adjust in 2023, as ‘Gig Economy is Here to Stay,’ New Survey Finds
FREDERICK, Md.–While the roots of much of the U.S. CU community took hold in single companies or professions, a new study shows just how credit unions will have to continue to adjust as the nature of employment changes in 2023 and beyond.
Announcing the “gig economy is here to stay,” a new study by Legal & General on gig economy workers in the country has found most are choosing flexibility over conventional appointment, even though it comes with a cost of the lack of basic financial safety nets such as health insurance and retirement planning.
The study found 69% of survey respondents saying they see themselves working in the gig economy for the foreseeable future, with fewer than 10% expressing a desire or plan to return to traditional salaried employment.
Small Biz Owners See Bumpy Road Ahead; New Challenges for Card Issuers, Says J.D. Power Study
TROY, Mich.— Small business owners who’ve spent several months battling inflation are bracing for an even bumpier road ahead, according to the J.D. Power 2022 U.S. Small Business Credit Card Satisfaction Study.
J.D. Power said the study found a growing sense of anxiety among small businesses is creating a new set of challenges for card issuers that must find ways to support their customers in an uncertain economic environment.
WASHINGTON–The new federal spending package includes a number of provisions that will affect how Americans and credit union members save for retirement, creates new powers around “emergency savings accounts,” and will also affect the options credit unions will be able to offer to their employees.
Proponents of the provisions say they are designed to help more than just Americans who can already afford to save or have access to workplace plans, and also aim to bring lower- and middle-income workers additional benefits, including a benefit that amounts to a matching contribution — up to $1,000 per person — from the federal government.
Another provision will make it easier for part-time workers to enroll in workplace retirement plans.
Economy Will ‘Run out of Air’ in Early 2023, Predicts New Fannie Mae Forecast
WASHINGTON—Following an upward revision to third quarter 2022 real gross domestic product (GDP) and stronger-than-expected incoming personal consumption data to begin the fourth quarter, the economy is now expected to eke out positive growth of 0.4% in 2022 before entering a modest recession in the new year, according to the December 2022 commentary from the Fannie Mae Economic and Strategic Research (ESR) Group.
The ESR Group stated that it views the current rate of personal consumption growth as unsustainable given the combination of a low personal saving rate and an elevated ratio of consumer debt to personal disposable income.
CHICAGO–A new forecast for 2023 from TransUnion is predicting that after two years of aggressive loan growth, particularly for credit cards and personal loans, and serious delinquency rates that generally remained near pre-pandemic levels, the consumer credit market will experience more pronounced changes.
TransUnion’s 2023 Consumer Credit Forecast is projecting delinquency rates for credit card and personal loans to rise to levels not seen since 2010, while at the same time, demand for most lending products will remain high relative to pre-pandemic levels, with the number of consumers securing auto and home equity loans increasing on an annual basis.
7 CUs, Other Organizations to Join With Filene to Begin Testing 4 Growth Concepts in 2023
MADISON, Wis. – The 17 credit unions and three system organizations that currently make up The Lab at Filene will begin testing four concepts in 2023 designed to “grow the bottom line of credit unions and create a deeper impact on credit union members,” according to the organization.
High Auto Prices Driving Comeback for Leasing
CINCINNATI—Expect leasing to make a comeback in 2023, one expert is predicting, citing skyrocketing new car prices and elevated used vehicle values that are driving consumers to find ways to lower the monthly payment.
Scott Hall, executive vice president of Swapalease.com, told CUToday.info he expects more lenders, including credit unions, will offer leasing as a means to help their members manage the monthly budget.
Study Forecasts Instant Payment Transactions to Soar Over Next 5 Years
BASINGSTOKE, U.K.–A new study from Juniper Research is projecting the number of instant payment transactions will exceed 376 billion globally by 2027, up from 97 billion in 2022, or a 289% growth rate.
The study forecasts that an increased roll-out of instant cross-border payment schemes in multiple countries will drive this growth by enabling businesses and consumers to benefit from greater speed and efficiency.
“This efficiency is gained by processing payments over instant payment rails, which provide time and cost savings, while also offering greater transparency over transactions to stakeholders than traditional payment rails,” Juniper said in releasing its report.
How Do You Like That Apple? Forecast Says Company’s Presence Will Only Grow
CUPERTINO, Calif.—With traditional credit unions and banks already wary of its ever-expanding presence, a new report says Apple is well-positioned to play an even larger role in the financial services market with its growing payments ecosystem.
That presence is expected to grow despite some recent product delays, S&P Global Market Intelligence forecast in a new analysis.
“The conspicuous absence of updates regarding two expected financial technology offerings with Apple's iOS 16 launch this fall implies more details need to be worked out,” S&P Global Market Intelligence said. “But analysts expect Apple will continue to broaden its fintech footprint, and they note a number of advantages that should help the company take some market share in the space. Those advantages include consumer affinity, trust in Apple's brand and an active device install base that the company projects could grow to two-billion globally by the end of 2022.”
Bitcoin ‘On the Road to Irrelevance,’ Say 2 Banking Officials
FRANKFURT, Germany—Two senior officials at the European Central Bank (ECB) are contending bitcoin is “on the road to irrelevance.”
Ulrich Bindseil, director general of market infrastructure and payments at the ECB, and Jürgen Schaaf, advisor to his department, offered their perspective stated in a blog post on the ECB website, Business Cloud reported.
Total Number of Contactless Payment Users to Leap Over Next 2 Years, Research Suggests
BASINGSTOKE, U.K.- The total number of unique contactless mobile payment users will reach one-billion globally by 2024, up from 782 million in 2022, a growth of 60%, according to a new study from Juniper Research.
The report identified increased investment in contactless acceptance infrastructure, especially across emerging regions, as key to driving growth, through which over 200 million new contactless payment users will be added to the market by 2024, Juniper said.
EV Trend Lines Deserve CUs' Attention
COSTA MESA, Calif—Things could get “very interesting” for electric vehicles (EVs) over the next few years, according to Experian, which is emphasizing that both the market and lenders are still trying to figure out numerous questions, but the trend lines are clear.
“There's still a lot of questions on battery health and what happens to the car once the battery health declines,” said John Howard, Experian’s director of product management for automotive. “I think OEMs are still trying to get their arms around that, as it impacts valuation of the car. There's still a lot of unanswered questions when it comes to EVs.”
BNPL Has ‘Significant Growth Potential’
NEW YORK–While its growth has been strong, a new forecast from Moody’s suggests buy now, pay later (BNPL) solutions have “significant growth potential” due to the appeal to both consumers and retailers.
Moody’s reported its latest fintech research explores the evolution of Buy Now Pay Later during the pandemic and how contrasting strategies are driving growth for fintech leaders PayPal and Block (formerly Square Inc.).
CFPB Provides More Details Around Plans for Open Banking
WASHINGTON–In follow up to its announcement earlier this week that it will befacilitating rules to provide for personal financial data rights for Americans, paving the way for open banking and open finance, the CFPB has now outlined options it said are designed to strengthen consumers’ access to and control over their financial data.
Recession in Early 2023 Now Being Forecast by CUNA; What it Will Mean for Lending, ROA
MADISON, Wis.–Saying it was appropriate he was speaking to the media on Halloween, CUNA’s chief economist is offering an updated forecast that sees a recession ahead.
“For the first time in my memory, we have a newly posted forecast that calls for the economy to be in a recession in the near future,” said CUNA Vice President of Research and Policy Analysis Mike Schenk.
Schenk noted U.S. economic growth in 2022 is expected to finish above 2%, but he is forecasting it will “break even” in 2023.
NEW YORK–The combination of ongoing inflation and the Federal Reserve’s pledge to keep raising rates until it is able to bring inflation under control will drive the American economy into a 1990-style mild recession starting in the Spring of early 2023, according to Fitch Ratings.
In a new report obtained by CNN, Fitch has cut its U.S. growth forecasts for this year and next, citing the Fed increases as the primary reason. The report notes U.S. GDP is now expected to grow by just 0.5% next year, down from 1.5% in the firm’s June forecast.
High inflation will “prove too much of a drain” on household income next year, Fitch said, according to the CNN report, which forecasts shrinking consumer spending to the point that it causes a downturn during the second quarter of 2023.
Why Analyst Says Card Deserves CUs’ Attention
SAN CARLOS, Calif.—Apple’s new savings account for Apple Card should be a “wake-up call” for credit unions, says one analyst, who is urging CUs to respond in the right way or risk losing deposits and member relationships.
Richard Crone, principal of Crone Consulting LLC, told CUToday.info that more credit unions need to support Apple Wallet—as well as all the other so-called “pay,” while additionally removing their and savings account withdrawal limits.
Transaction Volume for Mobile Payments Projected to Soar
CHINEHAM, England– Transaction volumes for mobile payments will grow 92% from 26 billion in 2021 to 49 billion in 2023, according to a new forecast.
In addition, growth in mobile contactless transaction volumes will significantly exceed contactless card volumes by 2023, as mobile contactless transactions grow twice as fast as contactless card transactions, a new report from Juniper Researchhas found.
IMF Sees ‘Stormy Waters’ Ahead for Global Economy
WASHIINGTON–The International Monetary Fund is warning the world economy is headed for “stormy waters” as it has downgraded its global growth projections for 2023, going as far as to caution a harsh worldwide recession lies ahead if policymakers mishandle the fight against inflation.
The tough forecast was included in the fund’s closely watched World Economic Outlook report, which was published in conjunction with the annual meetings of the World Bank and the IMF.
Forecast for U.S. Housing Market is Markedly Reduced by Morgan Stanley
NEW YORK–Morgan Stanley has markedly cut its U.S. housing market outlook, stating it now sees the house value correction continuing through 2023.
In announcing its new forecast, Morgan Stanley noted the costs for dwellings declined 1.3% between June and August. That marked the primary decline measured by the lagged Case-Shiller Nationwide House Value Index since 2012, according to several media reports.
“It is greater than only a small dip, it is a trajectory shift,” stated Fortune.com. “At the least that is in accordance with the most recent forecast produced by the economics crew at Morgan Stanley.”
Over the next 12 months Morgan Stanley said it expects U.S. dwelling costs, as measured by the Case-Shiller Index, to complete with a year-over-year improve of 4%.
‘Sense of Normalcy’ in Labor Market Still More Than a Year Away, Forecasts CA/NV League Report
ONTARIO, Calif.–The current state of a historically unusual labor market will not be reaching some “sense of normalcy” in California and Nevada until sometime between 2023 – 2025, according to a new forecast from the California and Nevada leagues.
The forecast was included as part of the most recent synopsis of 11 regional credit union trends across California and Nevada, which said when the data combined with monthly state-level jobs data, the “picture becomes clearer.”
“Slow growth in each state’s labor force — combined with a hefty financial cushion across worker households — continues to be one of several reasons rearing its head out of a confluence of worker and employee trends transpiring over the past 12 months, something not expected to change near-term,” the leagues said. “The pool of individuals who are ‘willing and able’ to work, as well as job-jumpers from one occupation to another, is making for one of the most difficult job market situations in modern history as many large employers and small businesses trudge forward.”