In their latest economic forecast, CUNA economists said they expect the U.S. economy to growby 2.25% in 2016, and 2.5% in 2017.
CUNA economists lowered their expectation for U.S. gross domestic products (GDP) growth by 0.25% for both 2016 and 2017, respectively, in the June 2016 CUNA Economic and CU Forecast.
“The meager downward revision to GDP reflects our view of uncertainty on the pace of U.S. economic expansion, which continues to remain modest,” said Perc Pineda, CUNA senior economist. “Still, U.S. economic fundamentals are stable. We continue to expect strong credit union financial operations for the rest of the year. In fact, the first quarter CU numbers came in above our forecast.”
Credit union loan balances will increase by 10.2% in 2016 and 9% in 2017, CUNA economists predicted.
“Loan growth this year will be only marginally lower than the impressive 10.5% loan growth of 2015,” the economists wrote. “As the economy continues to expand, we expect households to continue to release pent-up demand for autos, furniture, and appliances in over 2016, and a slightly slower pace in 2017 year. New auto loans, credit card loans and purchase mortgage loans will remain to be strong growth areas.”
The unemployment rate outlook for 2016 and 2017 remains upbeat. CUNA economists increased the year-end 2016 forecast to 4.8% from 4.7% and the year-end 2017 rate to 4.6% from 4.5%.
CUNA economists also expect only one rate hike this year, down from two. They predict the Federal Open Market Committee will bump the Fed funds interest rate 10 basis points to 0.6% at its December meeting.
CUNA economists lowered their forecast for the 10-year Treasury rate by 0.5% in both 2016 and 2017. The rates are now expected to be 2% at year-end 2016 and 2.5% at the end of 2017.
The credit union savings growth forecast up moved to 6.1% from 5% this year, and to 5% from 4% in 2017.