MADISON, Wis. (10/13/15)--CUNA economists in their latest economic and credit union forecast predicted that economic conditions will deteriorate somewhat through the end of 2015, but that credit unions should remain largely untouched by the weaker performance.
In the forecast, released quarterly, CUNA’s economic experts lowered their estimates for gross domestic product (GDP) growth for the third and fourth quarters to 1.8% and 2.5% respectively. Previously, the forecast called for 3% growth in both quarters.
For 2016, CUNA’s economists dropped their GDP forecast to 3% growth from 3.25%.
“Our headline inflation forecast for this year is now 1.25% compared with 1.5% previously,” the forecast said. “Our core inflation forecast for this year and next remains at 1.75%, with next year’s top-line estimate also holding at 1.75%.”
The forecast was prepared by Bill Hampel, CUNA chief policy officer; Mike Schenk, CUNA vice president of economic and statistics; and Perc Pineda, CUNA senior economist.
The trio also now expects the Federal Reserve to hold off on raising interest rates until the first quarter of next year, “with the rate reaching only 1% by the end of 2016 compared with our former estimate of 1.75%.”
Despite the bleaker overall outlook, however, CUNA’s economists still forecast solid growth for the nation’s credit unions, with particular strength expected in membership and loan growth.
Loan balances will climb by 11.2% in 2015 and by 10% in 2016, the forecast said.
“Loan growth this year will surpass impressive loan growth of last year,” the economists wrote. “As the economy continues to expand, we expect households to continue to release pent-up demand for autos, furniture and appliances over the next two years. New-auto loans, credit card loans and purchase mortgage loans will continue to be strong growth areas.”
Furthermore, the economists anticipate memberships to rise by 3.9% this year, thanks to upswings in auto lending and because of the movement spreading the word about the “positive credit union value proposition.”
“We expect another very strong year for membership growth next year at 3%,” the forecast said.