WASHINGTON–Economists at America’s Credit Unions are feeling slightly rosier about the U.S. economy and credit unions over the next 18 months, including the delinquency numbers, even as NCUA has publicly expressed its concerns over the latter.
Curt Long, VP of data and research and chief economist with the trade group, said a recent meeting of credit union economists, which includes TruStage’s Steve Rick, concluded with a new forecast of 1% GDP growth for the U.S. in 2025, up from their prior 0.5% forecast.
‘Modestly Better’
“I think that is reflective of an overall modestly better outlook on the economy than three months ago,” said Long. “I would caution that 1% is not great, but is a good result and speaks to the reduction of the risk of a really bad outcome over next 12-18 months.”
Where the CU economists had previously forecast a 60% likelihood of a recession, they have reduced that to 40% for the next year and a half.
“The stock market is doing well,” Long explained. “Also, there has been a dialing back of tariffs in a modest way and I think there is a better sense the economy is on stable footing.”
Muted Approach on Tariffs
Long said the forecast reflects a tempered approach to tariffs by the Trump administration.
“(The threat of tariffs) has been dialed back somewhat when you look at the reciprocal tariffs,” Long said. “It seems the appetite is not as extreme with some of those. The encouraging thing is when financial markets started to react strongly in the wake of the Liberation Day announcements, there was a response from the administration. While the administration does have goals with its broader tariffs policy, it seems there is recognition you don’t want to court disaster with those goals.”
Forecast for the Fed
The CU economists have also rethought how they believe the Fed will act when it comes to setting rates. Previously, the group had predicted two rate cuts this year and five for 2026. Now it believes there will be one rate reduction in 2025 and three in 2026.
As the CU Daily has reported, President Trump has been vocal in his criticism of the Fed and demanded it reduce rates now.
The Credit Union Forecast
When it comes to credit unions, Long said call reports from Q1 revealed stronger loan growth than had been expected, especially since the first quarter is usually weak on loan growth.
“We’re seeing on a year-over-year basis that loan growth is moving up,” Long said. “One area of strength in the first quarter was on the housing side. We saw credit union growth in mortgage loans, which I think speaks to what we’re seeing in the market more broadly. It seems like a lot of people who had been holding off on listing their homes because they have a 3% mortgage have gotten impatient and have started listing homes. Broader gauges around housing have also turned more positive.”
Improved Delinquency Numbers
Long said credit unions in Q1 also experienced a “big plunge” on delinquency rates, and while that is seasonally true every year, “the drop in this Q1 was pretty significant. That’s encouraging after a pretty consistent rise in delinquencies,” he said.
That runs counter somewhat to NCUA’s position. The agency recently hosted a webinar and has expressed its cautions around delinquencies. So why the difference of opinion?
“I would say on the year-over-year comparisons, things look much better now than six or 12 months ago,” Long explained. “We also have access to very current data. Even in data since the March call reports came out, we are not seeing anything that would raise alarms. Generally, the trend right now is good.”
America’s Credit Unions is has also upped its forecast for credit union average earnings in 2025 to 65 basis points.
“That’s not a strong number historically speaking and it’s not a terrible number, but it’s better than the one we had forecast a few months ago,” Long said.
