Pineda forecasts gross domestic product growth will be 1.8% this year, and 2.4% in 2017 even as the Federal Reserve steadily increases rates by another 75 basis points. “High interest rates are associated with economic expansion. However, we feel U.S. economic growth will remain moderate next year.”

A tight job market, better wages and rising home prices will allow consumers to continue borrowing despite rising interest rates. But CUNA forecasts those same factors will contribute to the consumer price index rising from 2% in 2016 to 2.25% in 2017.

“The tide has turned from deflation to inflation,” Pineda said.

For credit unions, their return on assets will fall from 0.76% this year to 0.65% in 2017. “Higher funding costs, higher operating expenses due to a tighter labor market, and lower fee income from overdrafts and NSFs will also contribute to lower return on assets in 2016 and 2017,” according to the CUNA report.

Despite mortgage interest rates rising, CUNA Mutual Group reported that credit unions had $430.6 billion in real estate loans at the end of October, up 8% from October 2015. “Mortgage rates are still low by historical standards, and are not expected to drastically increase in the near term,” Pineda said.

Loans for new and used autos rose 14% to $298.9 billion in October, while Member Business Loans grew 15.7% to $66.6 billion, according to the CUNA Mutual report. NCUA adopted a new MBL rule in March freeing credit unions from seeking NCUA approval when buying commercial loans.

“We can expect increases in Member Business Loans next year as changes in Member Business Loan rules take effect,” Pineda said.