CUNA News
  • LOG IN
  • Create Account
  • Sign Out
  • My Account
  • LOG IN
  • Create Account
  • Sign Out
  • My Account
  • Credit Union Magazine
    • Buyers' Guide
    • COVID-19
    • Digital Edition
    • Credit Union Hero
    • Credit Union Rock Star
    • Subscribe
    • Advertise
    • Contact
  • Advertise
  • Topics
    • Community Service
    • Compliance
    • Credit Union Hero
    • Credit Union Rock Star
    • Credit Union System
    • Directors
    • Human Resources
    • Leadership
    • Lending
    • Marketing
    • Operations
    • Policy & Issues
    • Sales & Service
    • Technology
  • Awards
    • Nominate Credit Union Hero
    • Nominate Credit Union Rock Star
  • Podcasts
  • Videos
  • Jobs
  • Contact

News

Home » 6 factors driving inflation
Leadership

6 factors driving inflation

Abating supply chain issues will ease inflation, says economist Steve Rick.

September 29, 2022
Bill Merrick
One Comment
2022_09-Steve-Rick-1200
Steve Rick, chief economist, CUNA Mutual Group.

A famous line from the Charles Dickens novel “A Tale of Two Cities” sums up today’s economy: “It was the best of times, it was the worst of times.” 

It’s the best of times due to low unemployment, more people reentering the labor market, unprecedented loan growth, and historically low delinquency rates, says CUNA Mutual Group Chief Economist Steve Rick. 

High inflation makes it the worst of times, adds Rick, who addressed the 2022 CUNA Operations & Member Experience Council and CUNA Technology Council Conference in Las Vegas. 

The U.S. inflation rate currently is 8.5%, he says, compared with the long-run average of 2.5%. 

“It’s too many dollars chasing too few goods,” Rick says, citing six factors driving inflation: 

  1. Pent-up demand for goods and services. 
  2. Supply chain disruptions, which have reduced inventories. 
  3. Rising energy and commodity prices. 
  4. Massive monetary and fiscal stimulus. 
  5. A lower dollar exchange rate, which increases import prices. 
  6. Rising housing and medical care costs. 

Supply chain issues are receding, Rick says, which will cause inflation to decline. Other factors driving down inflation include e-commerce, rising competition from globalization, rising productivity, low population growth, excess production capacity, and a growing labor supply. 

He predicts the inflation rate will fall to 3.5% in 2023 and to 2.5% in 2024. Economic growth will be a tepid 1% in 2022 and 1.5% in 2023, Rick says, before rising to 2% in 2024. 

He put the chances of a recession at 30% this year. That will depend on the severity of a recession in Europe and whether “the Fed raises rates too far too fast.” 

Rick says credit unions can expect:  

  • Slowing economic growth, falling inflation, and below-normal unemployment for the next two years. These measures should be back to normal levels by 2024. 
  • Rising long-term interest rates.
  • Slowing loan growth due to higher rates. 
  • Rising net-interest margins and earnings. 
  • Falling mortgage originations—by 40% to 45%--due to the Fed’s monetary policy. 
  • Rising labor costs as bargaining power shifts to employees due to higher turnover and quit rates. 

“By 2024,” he says, “everything will be more in balance.”

KEYWORDS #TechOME Conference economy

Post a comment to this article

Report Abusive Comment

Credit Union Magazine: Spring 2023

Spring 2023

Credit Union Magazine’s Spring 2023 issue features the 2023 Credit Union Heroes and examines CUNA-League advocacy priorities, board leadership, the impact of financial well-being efforts, fee-related compliance issues, predictions for the year ahead, and more.
Digital Edition •  Subscribe

Trending

  • CUNA Mascot Madness: Which mascots deserve a spot in the championship?

  • CUNA Mascot Madness: See the West winner and vote for the South champ

  • CFPB releases section 1071 small business lending final rule

Tweets by CUNA_News

Polls

Mascot Madness: Semifinal 1

Mascot Madness: Semifinal 2

View Results
More

Champion for the Credit Union Movement

Credit Union National Association is the most influential financial services trade association and the only national association that advocates on behalf of all of America's credit unions. We work tirelessly to protect your best interests in Washington and all 50 states. We fuel your professional growth at every level and champion the credit union story at every turn.

More CUNA

  • Membership
  • Contact Us
  • Careers

Resources for

  • Credit Union Advocates
  • Leagues
  • Press
  • Providers

Our Affiliates

  • American Association of Credit Union Leagues (AACUL)
  • Credit Union Awareness
  • Credit Union House
  • CUNA Strategic Services
  • National Credit Union Foundation
GET CUNA UPDATES
© 2023 Credit Union National Association | ADA Compliance Notice & Legal
Email Us