Softer credit conditions expected by bank economists

Credit conditions are expected to weaken slightly over the next six months as inflation remains elevated and financial conditions remain restrictive, according to the American Bankers Association’s latest Credit Conditions Index released last week.

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. 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 Sept. 22.

The ABA Credit Conditions Index has shown signs of modest improvement this year but still indicates expected deterioration. The Headline Credit Index registered 44.7 in the third quarter of 2026. This is the seventh consecutive quarter the index has come in below the neutral threshold of 50 – signaling expectations for weak credit conditions over the next six months.