Bank Economists: Credit Conditions May Weaken for Consumers and Businesses Over the Next Six Months

Credit conditions are expected to soften over the next six months as businesses and consumers wait for greater clarity on the economic outlook especially trade policy, according to the American Bankers Association’s latest Credit Conditions Index released today. 

The latest summary of 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 4, 2025. 

“While recent trade negotiations and the prospect of Congressional agreement on tax policy have provided some degree of reassurance to lenders, tariff-related uncertainty remains a headwind to credit conditions and broader economic growth according to the survey,” said ABA Chief Economist Sayee Srinivasan. “‘Hard data’ suggest the economy remains on solid footing, but consumer and business sentiment indicate that policy uncertainty remains elevated and is causing some firms and households to adopt a cautious approach to hiring, spending and investment.”

For the second quarter release:

• The Headline Credit Index fell 9.1 points in Q2 2025 to 32.1, marking its second consecutive quarter-over-quarter decline after expanding throughout 2024. The downturn was primarily driven by deteriorating expectations for consumer and business credit quality. The below-50 reading suggests that overall credit conditions are expected to weaken over the next six months. 
• The Consumer Credit Index fell 8.9 points to 28.6. Most surveyed bank economists expect consumer credit quality to deteriorate over the next six months, though most also expect consumer credit availability to remain unchanged. Overall, banks appear likely to maintain a prudent but stable lending posture in the near term.
• The Business Credit Index fell 9.3 points to 35.7 due to falling expectations for business credit quality. While just over half of respondents expect credit quality to weaken, respondents were more upbeat about firms maintaining access to credit, with all respondents indicating they expect business credit availability to hold steady over the next six months.

Read the full report with detailed charts and a discussion of the broader economic context.