ARLINGTON, Va.–For credit unions headed into their Fall planning sessions for 2022 and beyond, one economist believes it’s pretty safe to assume next year will be much like this year—unless some sort of new COVID variant emerges.
For CFOs and ALCOs, NAFCU’s chief economist, Curt Long, pointed to last week’s Federal Reserve virtual meeting from Jackson Hole, Wyo., where Fed Chairman Jerome Powell signaled he does not expect rates to move very much, at least on the bottom end. Powell has consistently said he does not anticipate the Fed will take action on rates until late 2022 or 2023.
“We may see some steepening of the yield curve,” said Long. “This year has been a little disappointing in terms of where we started in that regard. I think we have been getting mostly positive economic data. As the Fed has successfully kept rates low on short end, there is some room for rates to move up on the long end.”
For credit unions doing their planning, Long expects the economy will continue to add jobs and to see the resulting growth. The only potential bump in the road, according to Long, would be a turn in the COVID pandemic.
“I expect 2022 to be a lot like 2021,” said Long. “Obviously, COVID is still presenting credit unions with a lot of uncertainty. Economically, things should be a little more stable unless we get a really strong bout from a new variant. I do not expect to see the kinds of broad shutdowns (seen during the initial wave of COVID).
Lending Projections
As CUToday.info reported here, in its most recent Trends Report CUNA Mutual’s economists are projecting 8% loan growth over the next two years. Long says he largely agrees.
“I think 8% is mostly in the range,” Long said. “Lending has been slowing lately. We see that in a few areas, specifically autos, but it’s mostly a supply issue there. I’m not sure that is going to resolve anytime soon, and we will get into 2022 before we see inventory levels returning. So, that could be a headwind for the next six to 12 months. The housing market will continue plugging along. And consumer spending and revolving debt not yet back to trend, but they are making a lot of headway.”
For CFOs and ALCOs, NAFCU’s chief economist, Curt Long, pointed to last week’s Federal Reserve virtual meeting from Jackson Hole, Wyo., where Fed Chairman Jerome Powell signaled he does not expect rates to move very much, at least on the bottom end. Powell has consistently said he does not anticipate the Fed will take action on rates until late 2022 or 2023.
“We may see some steepening of the yield curve,” said Long. “This year has been a little disappointing in terms of where we started in that regard. I think we have been getting mostly positive economic data. As the Fed has successfully kept rates low on short end, there is some room for rates to move up on the long end.”
For credit unions doing their planning, Long expects the economy will continue to add jobs and to see the resulting growth. The only potential bump in the road, according to Long, would be a turn in the COVID pandemic.
“I expect 2022 to be a lot like 2021,” said Long. “Obviously, COVID is still presenting credit unions with a lot of uncertainty. Economically, things should be a little more stable unless we get a really strong bout from a new variant. I do not expect to see the kinds of broad shutdowns (seen during the initial wave of COVID).
Lending Projections
As CUToday.info reported here, in its most recent Trends Report CUNA Mutual’s economists are projecting 8% loan growth over the next two years. Long says he largely agrees.
“I think 8% is mostly in the range,” Long said. “Lending has been slowing lately. We see that in a few areas, specifically autos, but it’s mostly a supply issue there. I’m not sure that is going to resolve anytime soon, and we will get into 2022 before we see inventory levels returning. So, that could be a headwind for the next six to 12 months. The housing market will continue plugging along. And consumer spending and revolving debt not yet back to trend, but they are making a lot of headway.”
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