This article was originally published on CU Insight
The credit union industry has faced many challenges in recent years, including a persistent period of high inflation, rising interest rates, compressed income margins, and stagnant demand in the economy. This economic phenomenon has been difficult for many credit unions to navigate. The economy has prompted many questions over the last several years from, “Are we headed into, or in a recession?” “Are we out of pandemic norms or into the new?”. Despite our inquisitive nature, it's important to remain proactive and take steps forward and reimagine a future with a strategic and growth-focused perspective to identify and seize new opportunities. By emphasizing growth, credit unions can increase revenue, build member loyalty, and drive long-term success.
The top-of-mind focus areas for the credit union industry in 2023 include loan-to-share ratios as liquidity proves to be a challenge, increased loan delinquency, charge-offs, and repossession risk along with a rising interest rate environment, including relative investment duration/commitments.
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Federal Reserve Chair Jerome Powell said that if the U.S. job market continues to improve in the coming months or inflation accelerates, the Fed may look to raise interest rates higher than currently projected. Powell made these comments following the release of a government report that showed employers added 517,000 jobs in January and the unemployment rate fell to 3.4%
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