Credit unions continued to gain a larger share of U.S. loans in the third quarter, but loan growth might slow in 2017 under President-elect Donald Trump, according to bank and credit union reports released this week.
CUNA Mutual Group's “Credit Union Trends Report” released Monday showed total assets rose 8.3% to $1.3 trillion from a year earlier, while loans grew 10.2% to $868 billion.
Meanwhile, the FDIC Quarterly Banking Profile released Tuesday showed that total assets for banks grew 6.1% to $16.8 trillion, while loans rose 6.8% to $9.2 trillion.
Combined, the share of assets held by credit unions was 7.21% on Sept. 30, up from 7.08% a year earlier and 7.18% on June 30. Credit union loan share was 8.59% on Sept. 30, up from 8.35% a year earlier and 8.46% on June 30.
CUNA Mutual forecasts loan growth falling to 9% in 2017 for credit unions as government spending pushes up economic growth, inflation and interest rates.
“The election of Donald Trump has changed the outlook for economic growth, inflation and interest rates for the next few years,” the report said. “It appears interest rate normalization has begun, and with it slower loan growth.”
The combination of big infrastructure spending and tax cuts could boost economic growth by 0.5 to 1 percentage point above the forecasted annual growth rate of 2.2%, the report said.
“This will add to the growing inflationary pressure the economy is already experiencing as it approaches full employment and potential output,” it stated.
That, in turn, could lead the Fed to raise rates faster and higher than it would have raised them otherwise.
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