Despite a period of high inflation and rising interest rates, the economy is continuing its return to normal, said America's Credit Unions Head of Emerging Issues and Deputy Chief Economist Curt Long. 

In this month’s Economic Update, Long outlines the initial 2025 economic and credit union forecast, with the national economic outlook generally positive.

However, the credit union industry outlook appears to be more mixed.

The forecast for 2025 real GDP growth is 2.3%, in line with the estimated potential GDP from the Congressional Budget Office. 

“The unemployment rate continues to be a bright spot for the economy projected to hold steady at 4.1% with risks to the labor market receding in recent months. Inflation has also stabilized at 2.6%, which is above the Federal Reserve’s target of 2.0%, but is expected to gradually decrease throughout the year,” said Long. “This gradual decrease has reduced the projected number of interest rate cuts to a single quarter-point cut in all of 2025 as inflation proved to be much more stubborn than expected in 2024."

“Political risks, as in which campaign trail policies the Trump Administration prioritize, could have major impacts on labor supply, inflation, and deficit spending; but the economy enters 2025 in a healthy condition,” he added.

For the credit union industry, it is expected that stronger growth in savings will continue in 2025. Loan growth is projected to be 5%, revised down due to the housing market continuing to slow. Return on average assets (ROA) is expected to be 0.75%, below the long-run average. 

The forecast for delinquency rates and net charge-off ratios are expected to decline in 2025.

Watch the full economic update video below.