Trade tensions, slower global growth, Brexit uncertainty and rising corporate debt have prompted the Credit Union National Association (Cuna) to lower its economic forecast for 2019.
Samira Salem, senior policy analyst at the US sector body, said economic fundamentals “remain sound”. She pointed to low inflation and unemployment rate, and recent job creation, wage increases, and consumer confidence.
But she added: “Downside risks … make this a delicate moment for the economy.
“Slow labour force growth and slow increases in productivity suggest that the long-term sustainable rate of growth for the US economy is close to 2%.
“Over the near term we expect to see the pace of economic growth slow and foresee continued healthy, albeit less robust, credit union performance in 2019 as several key performance metrics return to long-run trend levels over the next year.”
Changes to Cuna‘s forecast include lowering the GDP growth forecast for 2019 from 2.25% to 2.1%.
And the forecast for loan growth was lowered from 8% to 7.75%. “Nevertheless,” said Dr Salem, “the expected 7.75% overall increase in loans is a healthy gain and higher than the average annual loan growth rate since 1990 (7.5%).”
The report also revises savings growth from 7% to 6% in 2019. “Against the backdrop of tight liquidity credit unions face an increasingly competitive market for deposit dollars,” said Dr Salem. A growing economy with continued relatively high consumer confidence also is expected to negatively affect savings growth.”
Looking at the national economy, she added: “The US economy grew at a strong pace of 2.9% in 2018 but we expect growth to slow to 2.1% in 2019.
“Sound economic fundamentals are obvious but the declining impact of tax cuts, slower global growth, continued trade tensions, and rising corporate debt could each serve as drag. Accordingly, we lowered our GDP growth forecast for 2019 from 2.25% to 2.1% and we’re now forecasting slightly lower GDP growth of 1.9% in 2020.”
