Share Balances Are Experiencing a Sharp Increase
Historically, the first quarter of the year is the strongest for share growth, as members deposit their year-end bonuses and tax refunds. In addition to these seasonal factors, the average U.S. savings rate skyrocketed from nearly 0% in early 2008, to 4.2% in the spring of 2008. The falling stock market, bank failures, and continuing economic instability have resulted in a consumer flight to safety and quality. Reflecting this, credit union industry share balances rose $43.6 billion in the first quarter of 2009, a record growth rate for the first quarter. Balances are up $56.4 billion, or 8.3% for the past twelve months.
All share categories have increased balances between 1Q 2008 and 1Q 2009. While both regular shares and share drafts reversed negative growth trends from the previous year, the accounts that experienced the highest rate of growth in the last 12 months were money market and IRA balances, growing 15.7% and 15.8% respectively. The share growth increase was led by a $19.1 billion rise in money market balances as members searched for competitive rates and liquidity. Although they comprise a smaller portion of the total portfolio, IRA accounts experienced very strong growth as stock market volatility heightened the appeal of insured retirement accounts with guaranteed returns.