What Gloomy Economy? 2022 to be Strong Year for Lending at Credit Unions, Economist is Forecasting

 MADISON, Wis.– Gloomy economic reports may have credit union leaders anticipating a slowdown in lending this year, but one credit union economist is forecasting the opposite will be the case in 2022—lending is growing.

Mike Schenk

Calling it “good news,” CUNA’s chief economist, Mike Schenk, said credit unions are “seeing some really strong results in credit union lending.”
Schenk noted CUNA had been forecasting 8% loan growth during 2022 for credit unions, which he said would be a reversion to the mean, or a move “back to normal.” But, he added, CUNA’s monthly surveys have revealed credit unions collectively have logged 8% growth in the first five months of this year.

“That’s a reflection of a lot of pent-up demand, and even though consumers and members are a little apprehensive about the future, they are engaged and spending and borrowing money,” Schenk said. “Because of that, we have actually increased our loan growth forecast for this year and now expect loans to grow somewhere closer to 12%. That has obvious bottom-line impacts on credit unions. If correct, it means ROA will generally be a bit higher, as have fewer investments yielding close to zero.”

The Jobs Report

Meanwhile, Schenk said the key takeaway from last week’s jobs report, which showed the U.S. added 372,000 workers in June, is “there is nothing in the report that really moved us off the view that it’s full steam ahead from the Fed’s standpoint when it comes to tapping the brakes. What that means is our forecast will be reflective of the Fed acting more aggressively because of inflation pressures, and essentially what that means is that while we were previously expecting the economy to slow down next year, all of that has been moved up.”

Schenk said CUNA’s economists are now expecting GDP to expand by only 1% this year and a little faster, 1.5%, next year. CUNA is forecasting the Fed funds rate will be 3.15% at year-end 2022 and 3.25% at year-end 2023. 

“There has been a lot of discussion among the (group of economists) about whether or not we will enter a recession,” said Schenk. “My own feeling is that won’t be the case.”