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Consumer deposit savings poised to drop from unprecedented record high

Inflation Taking Toll on Employees, Former Workers, and Recent Retirees

ONTARIO, CA (May 11, 2022) — Record-high banking deposits are poised to finally decline going into summer of 2022 as local households continue drawing down their unprecedented savings to afford today’s price inflation for goods and services. This is according to the latest analysis by the California Credit Union League (view background trends report here).

What’s more: even as inflation is expected to begin moderating sometime later this year, former workers and recent retirees may start trickling back into the job market at a faster pace this summer, which continues posting a record-high number of employment openings. Some households will decide the way to combat recent inflation going into the second-half of 2022 is to go back to work and recoup household earnings, which might push up the labor force (pool of individuals able and willing to work) closer to its pre-COVID pandemic level.

THE LATEST TREND
Going into second-quarter 2022, workers in the local labor market were reaping the benefits of a major historical financial cushion coming out of late 2021 and early 2022. Local household “savings” in checking and all other combined deposit accounts across California hit their highest levels ever experienced at 279 credit unions headquartered in the state, with this total-deposit figure skyrocketing 37 percent from pre-pandemic fourth quarter 2019 to fourth quarter 2021 (see graph down below).

This trend within the largest state represents an unprecedented two-year increase according to the latest California Credit Union Industry Snapshot report released today by the League (click for the latest loan and deposit trends). By extension, the entire U.S. credit union industry is most likely experiencing this same phenomenon by banking consumers nationwide.

 

THE BIG PICTURE
“As households’ financial flexibility is eroded by inflation and they continue drawing down their deposit savings, some former workers and recent retirees are starting to take note of the healthy jobs market and record-high number of open positions,” said Dr. Robert Eyler, economist for the League. “This summer will be an interesting inflection point as record-high employment openings intersect with persistent inflation costs on households and ongoing ‘recession’ jitters — all against the backdrop of rising short-term interest rates for deposits and lending.”

Putting aside any potential economic recession, Eyler said businesses and policymakers in California can expect the excess demand for workers by employers to continue through 2022 as part of the “shadow effect” of the COVID-19 pandemic and resulting public health policies. “How employers look for workers going into 2023 will depend on how the national and state economies experience anticipated slower growth with rising global uncertainty and any potential lingering effects of COVID-19,” he said.

DEPOSIT & LOAN DATA
Collectively, deposits made by California credit union members rose from $177 billion to $243 billion during the December 2019 to December 2021 period — a statistically significant barometer of local financial and banking activity. No other two-year period in recent history has experienced such an unprecedented boost in California credit union deposits by members and households to the tune of a net-positive $66 billion (the 37 percent growth mentioned above).

Altogether in California, credit union members (individual consumers), total loans, and total deposits either remained-at or reached record highs by Dec. 31, 2021 compared to the year-ago period, with 13.3 million members (consumers) and $154 billion in outstanding loans supporting local consumers and businesses. You can view the California snapshot report (web link above) for details on first mortgages, HELOCs/home equity loans, new auto loans, used auto loans, credit card lending, and business loans, as well as checking accounts, savings accounts, money market accounts, certificates of deposit, and IRA/Keogh accounts.

For statewide trends broken out by 10 local regions, click here: Bay AreaCaliforniaCentral CoastCentral ValleyGreater Napa ValleyNorthern CaliforniaSacramento CountySan Diego RegionSouthern California, and Ventura County.

LOCALLY HEADQUARTERED CREDIT UNIONS
California’s 279 credit unions are headquartered in 36 counties: Alameda, Contra Costa, Del Norte, Fresno, Humboldt, Imperial, Inyo, Kern, Kings, Lassen, Los Angeles, Marin, Merced, Monterey, Napa, Orange, Riverside, Sacramento, San Bernardino, San Diego, San Francisco, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Shasta, Siskiyou, Solano, Sonoma, Stanislaus, Sutter, Tulare, Ventura, and Yolo

INTERVIEWS WITH CREDIT UNIONS
To interview a local credit union CEO or obtain a list of locally headquartered credit unions in California, please inquire.

Contact
Robert Eyler
Economist for the California Credit Union League

eyler@econforensics.com

Matt Wrye
Senior Communications Manager
California Credit Union League

mattw@ccul.org or 1-909-851-3935

 


About California Credit Union League

Headquartered in Ontario, California, the League exists to help credit unions change people’s lives by supporting their operations, guidance, strategy and philosophy. Our trade association helps more than 260 local credit unions in California serve 13.3 million members and manage $285 billion in assets.

Contacts

Matt Wrye

Senior Communications Manager
California Credit Union League

1-909-851-3935 or mattw@ccul.org

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