MADISON, Wis. — Personal incomes have stagnated, consumer prices are on the rise, new home sales are declining and falling energy investments are dragging the economy down. But according to the latest CUNA Mutual Trends Report, things aren't quite bad as they seem.
The May report, which covers data for March, found that credit unions picked up 496,000 new memberships during that month, with loan balances growing at an 11% annualized pace, while bonuses and tax refunds lifted deposit balances by 0.4%.
But those gains are offset by the economy growing at an annualized rate of just 0.2% during the first quarter, below the long-run national rate of 2.5% thanks to falling energy investments, bad winter weather, strikes on the west coast and more. The economy's underlying growth rate, however, is currently at 3.0% and is expected to accelerate to 3.3% next year, CUNA Mutual said, well above the 2.4% pace set last year.
"Nevertheless, the economy is still operating 2% below its potential, referred to as the 'output gap,' but the economy is rapidly approaching its potential level of output. The Federal Reserve will therefor begin increasing interest rates later in 2015," the report stated.
Approximately 85,000 jobs were added to the economy during March, while the unemployment rate stayed steady at 5.5%. Personal income growth was flat and consumer prices rose by 0.2%, but home sales were down by 11.4%. Existing home sales, however, rose by 6.1%, with home prices up by 2% and the 10-year treasury interest rate up by six basis points to an average of 2.04%.
Among the other highlights of the report:
- Savings balances at credit unions rose above the $1 trillion mark in March, the first time in credit union history that has happened. March is traditionally one of the best months for savings growth because of tax refunds and bonuses, though CUNA Mutual predicted that savings balances would dip back below that mark in April after tax bills are paid.
- Loan portfolios grew by 0.6% in March, down from the 0.65% pace for March 2014. During the last year, CU loan portfolios grew by 10.6%, the fastest pace since December 2005.
- Membership rose at the highest rate since march 1997, with an annualized membership growth rate now at 4.0%. Memberships were up by 496,000 in March (0.5% month over month), up from 380,000 in March 2014. Membership currently stands at 102.8 million.
- Delinquency rates were down year-over-year, falling from 0.81% last March to 0.74% for March 2015. Delinquency rates have not been this low since August 2007, the date most economists mark as the beginning of the mortgage crisis.
- The total number of credit unions dropped by 13 in March, to 6,424, according to CUNA Mutual, with a year-to-date decline of 89 credit unions.
Click
