Dawit Kebede

Watch: Economic update

CUNA Senior Economist Dawit Kebede shares macroeconomic trends and credit union forecasts for 2024.

December 13, 2023


CUNA Senior Economist Dawit Kebede shares macroeconomic trends, credit union forecasts for 2024, and the student loan forbearance impact on credit union members in the November 2023 CUNA Economic Update.

Highlights from the most recent update include:

  • CUNA’s forecast group –which includes seven current and former CUNA economists—pegs the odds of recession through year-end 2024 at 33%.
  • Kebede shares that inflation is coming down fast.
  • CUNA economists believe the Federal Reserve will hold rates and not continue rate hikes.

“Many people who were on student loan forbearance accumulated a lot of debt. However, research from Arizona University broken down by financial institutions indicates that credit union members did not accumulate significant debt during this period. Credit union members increased their debt by 8.45%, compared to 25%-30% for banks and national credit card companies.” – Dawit Kebede

Macroeconomic trends

Gross domestic product (GDP) will track 2.5% growth in 2023, said Kebede. CUNA forecasts 1.5% GDP growth in 2024 as consumer spending slows.

The labor market remains strong, but has slowed since the first quarter. CUNA forecasts the unemployment rate will remain around 3.9%, but will increase to 4.3% in 2024.

The core personal consumption expenditure price index—the Federal Reserve’s preferred measure of inflation—increased at 2.4% based on annualized rate for three-months moving average between August and October, indicating inflation is coming down faster than expected.

Credit union forecast

Financial institutions are observing a decline in savings growth, Kebede reported. CUNA economists predict year-end credit union savings growth of 0% and loan growth of 8%. In 2024, they forecast 4% loan growth and 3% savings growth.

Credit unions’ loan-to-savings ratio was 85.1% as of September 2023, up from 81.5% at year-end 2022. By year-end 2023, CUNA economists predict this measure will reach 88.3%—a 40-year high. The delinquency and charge-off forecast for 2023 is 0.75% and 0.55%, respectively.