Consumer prices rose roughly 15% from early 2020 to the third quarter of 2022. By late 2025, prices were 26% higher. The United States has not experienced this level of inflation since the early 1980s, and it came after decades of mild, steady inflation.
To combat inflation, the Federal Reserve drastically raised interest rates, moving the federal funds target range from near zero in early 2022 to 5.25%-5.5% by mid‑2023. The resulting higher prices and borrowing costs reshaped member financial behavior in ways that still reverberate across credit unions today.
CONSUMER SENTIMENT VS. AVERAGE CREDIT CARD BALANCE
FOR SAMPLE SIZE
SOURCE: CALLAHAN & ASSOCIATES
Strategic Insights
- Inflation eroded member confidence and increased reliance on credit. Consumer sentiment hit historic lows in 2022; credit card balances have steadily risen since then.
- Since the first quarter of 2021, unsecured credit card lines in the United States has increased 28%, according to the Federal Reserve Bank of New York. For credit unions, it has increased 18%. That U.S. households are relying on revolving credit more than at any other time in recent history is worrying sign that inflation is still working its way through personal finances.
- Meanwhile, consumer sentiment plummeted from 85.5 in mid-2021 to an all-time low of 50.0 one year later, according to the University of Michigan Survey of Consumers. Households primarily cited concerns over inflation for their dark outlook. According to a study by McKinsey at the time, 65% of U.S. consumers said they were concerned about inflation, 30 percentage points higher than the next biggest concern.
- Inflation compounded the cost of living crisis, opening the door for financial nihilism. Many, especially younger folks, feel the cost of living most acutely; housing, education, and transportation keep many from establishing their footing in today’s economy.
Don’t stop here. After a decade of low inflation, credit unions had to adjust quickly to a very different cost environment. How did sustained price pressures reshape credit union financials and member behavior? Read more in “How Inflation In 2021-2022 Changed Today’s Credit Union Financials,” available exclusively for Callahan clients in the Callahan Client Portal. Read more today.