CUNA Senior Economist Dawit Kebede provides a macroeconomic and credit union forecast for 2023 in the May 2023 CUNA Economic Update.
“After the failure of some banks, it’s not only demand for loans that is going to be impacted, but supply of credit is also going to be tight … Standards are tightening and demand is also falling for commercial, industrial and household loans," he said.
Highlights from the most recent update include:
Kebede said he expects credit union savings growth to be 4% this year and 5% next year, while loan growth will slow down relative to last year, but will remain close to the long-run growth trend.
Liquidity will tighten further in 2023 with the loan-to-savings ratio rising by another 2.8 percentage points to 84.3% by year-end.
“We are forecasting inflation would continue to slow down and probably reach 3.5% by the end of the year. Still, above the Fed’s target of 2%, but maybe next year it will come down to where the Federal Reserve wants it to be. In the process, the unemployment rate would trend up a little bit to 4% and that's also consistent with prices coming down … That’s our forecast for year-end. No other further increases coming this year and probably when inflation starts to go down next year rates will start to go down," he said.