Earlier this year, CUNA economists released a forecast that called for a recession in 2023. However, economic conditions have changed.

“This has been one of the most interesting six to nine months of forecast I’ve ever been involved with,” says Mike Schenk, CUNA’s chief economist. “For the first time in the 33 years I’ve been at CUNA, we put together a forecast that said the U.S. economy is headed for a recession, but after two additional forecasts, the viewpoint has changed pretty dramatically.”

Schenk provided a look at the newest economic forecast during the 2023 Credit Union Board Roundtable Saturday in Chicago. The forecast, which calls for a general return to normal, examines:

Loan and savings growth. With high interest rates, economists forecast slower loan demand, with overall loan growth of 7% in 2023 and 4% in 2024. Currently, the forecast calls for no growth in savings in 2023 and a 3% growth in 2024. Given these two factors, liquidity will continue to be a concern.

Loan-to-share ratio. The forecast calls for the overall loan-to-share ratio to hit 87.4% in 2023 and climb to 88.1% in 2024—the highest level in many years, Schenk says. The ratio’s 30-year average is 75.6%.

Delinquency and net charge-offs. Both are rising quickly. In 2021, overall credit union loan delinquency was 0.48%, the lowest rate in history, and net charge-offs were 0.26%, the lowest in 22 years. Both low levels due in part to federal stimulus money during the pandemic. However, economists forecast delinquency to climb to 0.8% in 2023 and 1% in 2024, with net charge-offs increasing to 0.6% in 2023 and 0.7% in 2024.

Net long-term asset ratio. As of March 2023, 41.8% of credit union assets were long-term, a portion of the portfolio that’s more sensitive to interest-rate swings. Schenk says boards need to be aware of interest-rate risk and know how their credit unions are addressing this risk.

Return on assets (ROA). Credit unions are experiencing healthy earnings, however, they’re not able to grow as quickly and maintain appropriate levels of capital. After reaching a 25-year high of a 1.07% ROA in 2021, this has fallen, and economists expect it to continue to fall. ROA is forecast to be 0.65% in 2023 and 0.65% in 2024.

Solvency. Credit unions’ net worth as a percentage of assets continues to increase. After hitting 10.3% in 2020, it’s forecast to be 11% in 2023 and 11.2% in 2024.

“All in all, credit unions are in pretty good shape,” Schenk says. “It’s not a rosy forecast by any stretch, but it’s a pretty decent forecast given the potential hiccups.”