CUNA Chief Economist Mike Schenk said the 8% growth in loan balances from Dec. 31 to May 31 is the largest since CUNA began tracking monthly balances 30 years ago. The median year-to-date gain for May since 1991 is 2.5%.

Schenk said the reason credit unions are doing better than others might reflect surveys that he said show credit union members believe it is easier to get a loan and a good rate than non-members.

Generally, Schenk said the increased lending reflects pent-up demand as the economy continues emerging from a downturn. And some of the borrowing might be front loaded as consumers believe rates will rise, and that borrowing now will be cheaper than later.

Mike Schenk

Schenk said he is not forecasting a recession, and that he sees signs inflation pressures are easing.

Manufacturers reported in Federal Reserve surveys that they think supply chain issues will improve significantly over the next six months. Other factors feeding inflation are also moderating, Schenk said.

"That may compel the Federal Reserve to be a lot less aggressive, which should be helpful," he said. "The Fed has orchestrated soft landings in the past, and it's possible they will again this time."

May's loan growth was broad:

• Total car loans grew 14.3% to $450 billion in May from a year earlier, and rose 2.3% from the previous month, compared with a five-year average gain of 1.1%.
• Total real estate lending grew 13.7% to $705.6 billion in May from a year earlier, and rose 2.1% from the previous month, compared with a five-year average gain of 0.8%.
• Credit card balances grew 11.1% to $66.8 billion in May from a year earlier, and rose 2.2% from the previous month, compared with a five-year average gain of 1%.

Credit card balances dwindled after COVID-19 was declared a pandemic in March 2020, and had remained below the February 2020 mark for more than two years.

However, the Fed's G-19 Consumer Credit Report released Friday showed both banks and credit unions had finally recovered by May with balances up 1.9% at credit unions and up 2.4% at banks from their February 2020 levels.

The Fed's latest report revised April numbers upward, showing credit unions actually passed the recovery mark in April by 0.2%, while its previous report had shown their balances still slightly below the mark.

Credit unions' share was 6.3% in May, unchanged from April and down from 6.5% in May 2021.

Banks held $964.4 billion in credit card debt in May, up 15.1% from a year earlier. Their share was 90.7% in May, unchanged from April and up from 89.9% in May 2021.

NAFCU Chief Economist Curt Long said he expects credit cards and other revolving loan balances to grow quickly through the rest of the year, especially in a period of high inflation.

Credit card borrowing plummeted during the pandemic as consumers, who were flush with cash due to stimulus checks and reduced spending, paid down balances. The balances in May would have been expected to be about 6% higher if not for the pandemic, Long said.

Curt Long

"This highlights the fact that household balance sheets are still in good condition overall and consumers have more borrowing capacity," Long said. "Average borrower quality measures are still extremely strong, and loan delinquencies remain near all-time lows."

In the automotive market, CUNA found the balance of new car loans grew 10.8% to $159.7 billion in May from a year earlier, and rose 2.3% from the previous month, compared with a five-year average gain of 1%.

Data released Friday by the Federal Reserve Bank of St. Louis showed sales of new cars and light trucks from January through June are down 18% from 2021's first half.

In May, new vehicles sold at a seasonally adjusted annual rate (SAAR) of 12.7 million, down 12.2% from April and down 24.8% from May 2021. June was up 2.3% from May.

CUNA found used car loans grew 16.3% to $290.3 billion in May from a year earlier, and rose 2.3% from the previous month, compared with a five-year average gain of 1.2%.

Cox Automotive released used car data for June on Friday, and Cox Automotive Chief Economist Jonathan Smoke said it showed signs the used car market has been accelerating this year, and July's sales could exceed those of July 2021.

"Contrary to some opinions, there is little evidence of consumers pulling back, either when it comes to the retail vehicle market or more broadly reducing spending in total," Smoke said.

"If the consumer pulls back, we will see a recession, as the U.S. economy is consumer driven," he said. "But I'm not seeing evidence of us going into or already being in a broad market recession. The jobs market is solid, and consumer demand is there as a result."

Credit unions also ran counter to trends in the mortgage market. The June 10 forecast from the Mortgage Bankers Association showed the balances of first mortgages were up 8.4% in March and up 8.1% in June, compared with a year earlier.

CUNA found first-mortgage balances were up 11.4% in March and 14.4% in May.

CUNA's report also showed:

• Assets were $2.15 trillion, up 6.3% in May from a year earlier, and down 0.3% from the previous month.
• Savings were $1.88 trillion, up 7.8% in May from a year earlier, and fell 0.7% from the previous month.
• Members were 133.5 million, up 3.2% in May from a year earlier, and up 0.2% from the previous month.
• The 60-day-plus delinquency rate was 0.42% as of May 31, compared with 0.47% a year earlier and 0.43% a month earlier.
• Loans per member were $10,404, up 11% in May from a year earlier, and rose 2.1% from the previous month.
• Savings per member were $14,074, up 4.4% in May from a year earlier, and fell 0.9% from the previous month.