Credit Outlook Improves, But Consumer Lending Concerns Persist, ABA Reports
By CU Today Staff —
WASHINGTON — While credit conditions are expected to continue softening slightly over the next six months as the labor market encounters headwinds and the economy handles external shocks, they are expected to remain stable according to the American Bankers Association’s latest Credit Conditions Index.
ABA’s Credit Conditions Index examines a suite of indices derived from the quarterly outlook for credit markets produced by ABA’s Economic Advisory Committee (EAC). The EAC includes chief economists from North America’s largest banks. Readings above 50 indicate that, on net, bank economists expect business and household credit conditions to improve, while readings below 50 indicate an expected deterioration. The bank economists were surveyed on June 2, 2026. After falling into contractionary territory in 2025, the ABA Credit Conditions Index has shown signs of improvement, registering 48.8 in the second quarter of 2026, which is up 11.3 percentage points from the previous quarter. This marks the sixth consecutive quarter the index has come in below the neutral threshold of 50 — signaling expectations of deteriorating credit conditions over the next six months. EAC economists currently expect moderate real GDP growth through the end of 2027, sustained by higher nonresidential fixed investment. They estimate only a 25% probability of a recession in 2026 and expect PCE inflation to remain above 3% for the rest of the year.
“While bank economists anticipate some softness in credit conditions over the next six months, expectations have become somewhat more favorable,” said ABA Chief Economist Sayee Srinivasan. “Despite elevated inflation and modest job growth, the economy is still projected to expand.”
For the second quarter release:
Originally reported by CU Today.