The credit union industry’s path forward will be defined by strategic liquidity management and sustained advocacy wins in Washington, D.C., according to one industry expert during REACH 2025’s “Navigating the Road Ahead: U.S. Economic Outlook, CU Industry Trends, and the Advocacy Landscape” session on Wednesday.
(View and download event photos from the REACH 2025 Photo Galleries)
Headlining the discussion was Steve Rick, chief economist and credit union industry forecaster for TruStage, who provided a nuanced economic forecast. Overall, the United States is headed toward slower economic growth in 2026 that is below-trend. Rick projects real Gross Domestic Product (GDP) growth could settle around 1.5 percent in 2026, a slower pace reflecting the long and variable lags of tight monetary policy finally impacting the broader economy.
Rick said the Federal Reserve is expected to continue lowering short-term interest rates in 2025 and 2026. He emphasized that this monetary easing is designed to stabilize the economy, not accelerate it, and that credit unions must remain vigilant against mounting consumer financial stress. That stress is visible in asset quality metrics. Unemployment is projected to climb from its current low to the “natural rate” of somewhere between 4.5 – 5 percent in 2026.
The U.S. net charge-off rate for credit unions has been on the rise, hitting 1.11 percent earlier in 2025. This is driven by persistent factors like falling real wages (as inflation remains above the 2 percent target), high rent inflation, the resumption of student loan payments, and surging car insurance costs leading to more “walk away” auto repossessions.
For the lending marketplace, he forecasts U.S. credit union loan growth to rise to 6 percent in 2026, still below the long-run average of 7.2 percent. Recently, home equity loan balances were the fastest growing lending category in 2025.
However, liquidity remains a top concern. Recent U.S. savings growth at credit unions of 3.6 percent continues to lag the long-run average of 7 percent.
The panel emphasized that despite macro-economic headwinds, credit unions are successfully managing their margins. The peak of profitability is evident in the data, with credit union Yield-on-Assets (YOA) reaching 5.06 percent earlier in 2025, the highest level since 2008. This has been primarily driven by older, low-rate loans repricing into today’s higher interest-rate environment. This positive trend is expected to somewhat bolster Return on Assets (ROA) in 2026, reinforcing earnings power.
To counter rising competitive pressures and higher operating expense ratios, the pace of consolidation is accelerating. Looking back later this year, the number of credit unions across the United States is expected to decline by approximately 180 in 2025, the fastest pace since 2022, as smaller institutions with limited capital and digital capabilities are increasingly seeking merger partners.
The integration of artificial intelligence (AI) was also highlighted as a lever for managing higher operating costs. There are hopes this will drive productivity gains that allow credit unions to “do more with less” through staff attrition rather than new hiring.
The session concluded with a frank assessment of the advocacy landscape, noting that while the industry secured recent defensive victories, constant threats remain. Key policy areas that credit unions need to watch at the state and federal levels include interchange fees, as Rick praised industry unity in defeating attempts to attach interchange cap legislation (like the Credit Card Competition Act) to major bills — but warned the issue could resurface in the future. Protecting card reward programs, which are often funded by interchange income, remains a core priority too.
Beyond interchange, regulatory compliance is also a major focus as new and complex requirements, particularly those from the Consumer Financial Protection Bureau (CFPB) regarding consumer data access, pose burdens and risks, especially for smaller credit unions. Additionally, the need for legislative clarity and regulatory frameworks for digital assets was emphasized, ensuring credit unions have the flexibility to innovate while maintaining safety and soundness.
Rick said proactive engagement at the state and federal level, coupled with a demonstrated commitment to financial wellness, is the only way credit unions can maintain their influence and protect their unique, not-for-profit tax status.
Attendees and League staff will be sharing photos, comments, and memories through LinkedIn at #CUatREACH.
REACH is one of the credit union industry’s premier annual events, attracting leaders and system partners from across California, Nevada, and the United States. It is held from October 27-30 at JW Marriott Desert Springs in Palm Desert, CA this year.
