As consumers and workers face economic uncertainty going into late 2023, deposit account products and savings interest rates remain front and center for households that are managing their financial livelihood — something evident within second-quarter credit union trends.
Deposits declined by $3.2 billion across locally headquartered credit unions in California and Nevada (combined) from June 2022 – June 2023 (scroll down for statewide deposit and loan trends). Simultaneously, households continued their healthy borrowing, providing steady lending and economic growth across both states.
These sturdy loan trends only masquerade the obvious: price inflation on goods and services for working households in a job environment where wage-and-salary gains haven’t completely caught up. It means credit union members in nearly all socio-economic tiers across California and Nevada will need to take a serious look at their financial situation going into 2024, all while economists and financial experts pin their hopes on a continued disinflationary environment.
“We need to see continued disinflation as a result of the Federal Reserve’s policies, as it informs the economy that higher interest rates are working,” said Robert Eyler, contract economist for the California and Nevada Credit Union Leagues. “This is likely to come at a cost, with job losses and a cooling labor market, which policymakers have been waiting for since interest rate hikes began. Lower job levels should eventually cool inflation faster — although recent events in the Middle East may exacerbate fuel costs in the short term.”
‘At Some Point, It All Runs Out’
Steve Rick, chief economist for TruStage, noted in his latest U.S. credit union trends report that for the first time since 1948, the U.S. money supply is declining.
“In fact, it’s down more than $1 trillion since its high-water mark of $21.9 trillion set in April 2022,” Rick said. “This 5-percent reduction in money supply and deposits is having a major liquidity impact on banks and credit unions.”
Elliot Eisenberg, chief economist of Graphs and Laughs, said during an Origence credit union industry economic forecast webinar this week that although today’s approximate U.S. consumer savings rate is 4 percent, it’s not commensurate with healthy job growth and a very low unemployment rate.
“Even with all this excess COVID-era savings, we still can’t save any money today,” Eisenberg said. He noted how national “excess” household pandemic savings was recently revised higher and won’t run out until sometime in 2024.
“Real disposable income (adjusted for inflation) should be much higher in a time like this,” Eisenberg added. “Unemployment is low, which is keeping our economy going — but how much longer can we go before higher interest rates hit us? At some point, it all runs out. Higher wages never fully came back to feed higher inflation. Households cannot leverage their credit cards higher forever.”
For perspective on where the industry stands going into late 2023, below are deposit, loan, and membership trends for 263 locally headquartered credit unions across 36 counties in California, as well as 14 locally headquartered credit unions in eight counties across Nevada.
California’s 2Q 2023 Credit Union Trend
All California state-level credit union industry trends are year-over-year as of June 30, 2023:
California’s Member Trends
California’s Total Loans: $193 billion (14 percent increase)
California’s Total Deposits: $241 billion (-1 percent decrease)
California’s Operations: $2.5 billion spent (quarterly)
Nevada’s 2Q 2023 Credit Union Trends
All Nevada state-level credit union industry data trends are year-over-year as of June 30, 2023:
Nevada’s Member Trends
Nevada’s Total Loans: $4.5 billion (18 percent increase)
Nevada’s Total Deposits: $6.9 billion (-2 percent decrease)
Nevada’s Operations: $100 million spent (quarterly)
2855 East Guasti Rd., Suite 202
Ontario, CA 91761
909.212.6000
1201 K. St., Suite 1050
Sacramento, CA 95814-3992
916.325.1360
c/o Great Basin FCU
9770 South Virginia Street
Reno, NV 89511-5941
202.638.5777 www.cuna.org
www.dfpi.ca.gov
Clothilde “Cloey” V. Hewlett — 415.263.8500
fid.state.nv.us
702.486.4120 (Las Vegas)
775.684.2970 (Carson City)