In the latest Credit Union National Association (CUNA) Economic Update, CUNA Chief Policy Officer Bill Hampel examined some positive economic trends for credit unions heading into the second half of the year, but warned of some potential long-term concerns.
“It’s a complicated picture, but all in all things look positive for credit unions,” Hampel said in the video update. “As interest rates rise, credit unions’ net interest income is also likely to rise, and-assuming steady, controlled economic growth-the movement should be poised to continue thriving despite inflationary changes and uncertainty in Washington.”
He said he was a little surprised that net income growth through the first quarter remained essentially flat through the first quarter, given recent interest rate hikes. However, with at least one more hike expected this year – possibly two – credit unions net income should tick up in the second half of the year.
Looking out a little longer term, Hampel said the causes of the next recession could emerge if a couple things happen. With the employment rate nearing full employment at 4.3 percent, if the economy grows too fast, it could lead to inflation, more rate hikes, and a possible recession.
The best outcome for the U.S. economy is slow, steady growth, in the 1.5 percent to 2 percent range, he said. That would likely keep inflation at bay and interest rates lower.