Credit unions can expect a slight slowdown in the economy in the latter part of this year and in early 2020 according to economist Alan Beaulieu, who addressed a general session audience Monday at the 2019 CUNA Finance Council Conference in New York City.

“When we look at the U.S. economy it is slowing down,” Beaulieu says. “It’s not a function of if it will, it already is. There’s really nothing ominous about it. We reached a peak of growth in October of last year, and now we’re slowing down.”

The slowdown won’t last long, Beaulieu says, probably late into the first quarter or early into the second quarter of 2019. “There will be no recession, but this year we will have the slowest rate of growth since 2009,” he says. “This will be an off year that will be noticed by all kinds of people.”

Beaulieu says, “while credit unions are probably feeling pretty good about loans right now, things are about to change,” as retail sales slow down. New home sales have already begun to decline.

“The reality is, there will be pockets of prosperity, but overall you are going to be writing fewer mortgages,” Beaulieu says.

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He adds that auto sales reflect retail sales, which have already begun to decrease. “Consumers are not buying as much in department stores,” he says.

Overall delinquency rates have begun to rise nationally. Interest rates won’t rise significantly this year, Beaulieu says, but they will rise over the long term.

“Interest rates have been in decline since the 1980s,” he says. “We’re eventually going to see them go up. They’ll probably go up in 2021 and in 2022 some more. It won’t be a deal breaker because wages will go up as well, but we’ll have to adjust to a new reality.”

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