America's Credit Unions Steers Economic Forecast to a Sunnier Side

Chances of a recession by the end of 2026 are 40%, down from 60% in its April forecast.

By Jim DuPlessis | July 21, 2025 at 05:00 PM

America’s Credit Union economists are taking a sunnier view of prospects for the U.S. economy this year as damages from tariffs are so far less than expected, the stock market is rising, delinquencies are stable and unemployment remains low.

AmCU Chief Economist Curt Long said the third-quarter forecast lowers the chance of recession over the next 12 months to 40%, down from 60% in April.

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AmCU said it expects Gross Domestic Product to rise 1% this year, which Long said was “not strong,” but better than the 0.5% growth it forecast in April.

“That is reflective of an overall more positive outlook on the economy than the one we had three months ago,” Long said. “There’s a better sense the economy is on stable footing.”

However, Long said the resiliency of the economy is also likely to slow down Fed rate cuts. Three months ago, AmCU expected the Fed to cut rates twice this year and five times in 2026. Now it expects just one rate cut this year, and three in 2026.

Credit union net income is likely to be about 0.65% of average assets this, up from the 0.40% ROA forecast in April.

Long said the economic team took heart from a stall in the rise of delinquencies and stronger loan growth in the first quarter.

However, NCUA data showed 12-month loan growth has been slowing to record lows and while delinquencies stalled in the first quarter, they had still been rising to record levels as recently as the fourth quarter.

In fact, NCUA economists stressed the weakness in credit union results and rise in credit risks in a webinar last week.

And the Mortgage Bankers Association has been revising its GDP forecasts downward for the last two months.

The MBA’s monthly forecasts for 2025 have gone from 1.2% in March to 0.3% in April in the wake of Trump’s announcements of large, world-wide tariff hikes. It rose to 0.8% in May and has since drifted down.

The MBA’s forecasts have also been declining for first mortgage originations. Its April 11 forecast called for 17% growth this year, but those forecasts have fallen slightly each month since. Its July 17 forecast called for 14% growth.

During the NCUA’s “Managing Credit Risk” webinar July 15, Board Chairman Kyle Hauptman warned credit union leaders about deteriorating loan quality.

“NCUA’s examiners have observed trends of declining capital levels, rising delinquency rates and lower earnings across the system and at specific institutions,” Hauptman said.

Delinquency rates and rolling 12-month net charge-off rates for used vehicle loans were the highest on record in March. The rolling 12-month net charge-off for credit cards exceeded the peak during the global financial crisis 15 years ago, he said.

Contact Jim DuPlessis at [email protected].

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