ABA Report: Business, Consumer Credit Markets to Experience Sustained Rebound

Top economists from the largest U.S. banks anticipate a sustained rebound in consumer and business credit market conditions over the next six months, according to ABA’s Credit Conditions Outlook released today.
The report highlights the results of the ABA Credit Conditions Index and summarizes a suite of indexes derived from the quarterly outlook for credit markets produced by ABA’s Economic Advisory Committee. According to the third-quarter 2021 report, after improving markedly last quarter, near-term expectations for credit quality and availability remain healthy for consumers and businesses.

All three components of the index (headline, business and consumer credit) held well above 50, suggesting that bank economists anticipate that credit market recovery will continue over the next six months as the economy continues to bounce back from last year’s brief but deep recession triggered by the pandemic. (Index readings above 50 indicate that, on net, economists expect credit conditions to improve, while readings below 50 indicate deterioration.) The headline credit index increased 1.1 points to 76.8; the consumer credit index declined 5.9 points to 76.8; and the business credit index increased 3.7 points to 76.8.

“A rapid and successful vaccination effort this spring, billions of dollars of built-up savings that can now be spent, and the unprecedented pandemic response from the federal government have positioned the U.S. economy for strong growth in 2021,” said ABA Chief Economist and Head of Research Sayee Srinivasan. “However, bank economists have identified a potential for rising inflation and supply chain and labor market constraints as key economic risks that could negatively impact the credit markets in the coming months. Time will tell whether these headwinds will prove to be temporary or sustained,” he said.