Outstanding loan balances at credit unions increased 0.5% in the month of May, according to CUNA's monthly estimates report released Monday.

However, the big news so far this year according to Chief Economist Bill Hampel is that 2013 loan growth is expanding beyond first mortgage loans, which have been responsible for bulk of post-recession lending to date.

Overall, loans have grown 2.8% during 2013 through May 31, according to the report which is based upon credit union sampling. More than half of that figure – 1.5% – has been in first mortgages.

However, new auto loan balances have increased 1%, and unsecured personal loans and credit cards have grown 0.8%. Used auto loans outstanding have increased 0.2%, while home equity lending has declined 0.5% year-to-date.

NAFCU's most recent member survey also shows lending on the rise, with its members reporting 7.16% loan growth in April 2013 over the previous year. However, NAFCU members reported loan gains in different categories. The report shows a big increase in used auto loans – 0.74% in April – but a decrease of 0.26% in new auto loans.

And, while NAFCU member credit unions surveyed reported an uptick of 0.05% in credit card balances in May, first mortgages declined from the previous month by 0.37%.

David Carrier, NAFCU's chief economist, agreed with Hampel that economic indicators seem favorable for loan growth this year. However, Carrier cautioned that he's concerned about the impact the federal sequester spending cuts will have on the economy, as roughly 680,000 military civilian workers begin one-day-a-week furloughs this month that will reduce their take home pay by 20%.

“The economy seems to be rebounding, the housing sectors are doing well, but I can't say what the impact of the sequester cuts will be during the second half of the year,” the NAFCU economist said. “There's a downside risk here we have to worry about.”

Those cuts to defense paychecks could have a big effect on credit unions, because the nation's largest and third largest credit unions, the $54 billion Navy FCU and $16 billion Pentagon FCU, serve the military as their primary field of membership.

“The first wave of the sequester cuts hits contractors, the second wave would be the furlough of federal employees, and the third wave would be layoffs,” Carrier said. “I'm worried about the impact of all three.”