Credit managers navigate uncertainty amid complicated economic outlook

With conflict brewing in the Middle East, fluctuating economic policies and a cooling labor market, it is hard for credit professionals to predict where the economy is headed when each day seems to pull it in a different direction. 

Why it matters: The United States is seeing seemingly strong economic data undercut by more depressed consumer sentiment and a stiffer job market. As economic uncertainty rises, more and more customers will be looking for credit, tasking credit managers with predicting how the changing tides of the economy will come to weigh on their portfolios.  

“We’re entering 2026 in a fragile expansion,” said Morgin Morris, senior vice president for KeyBank Real Estate Capital during an NACM webinar, The Road Ahead: Economic Predictions and What Credit Managers Need to Know. “We’re supported by resilient gross domestic product (GDP) growth and rapid technological growth, but increasingly constrained by policy uncertainty, cooling labor dynamics and rising geopolitical risks.”  

There are two sides to the U.S. economy at the moment. From one angle, the economy is growing and the GDP is resilient, but consumer sentiment seems to be weakening. “It looks like a Boomcession, where there is a disconnect between economic output, which is strong and growing, and consumer sentiment,” Morris said. “We can point to artificial intelligence (AI)-driven productivity gains and strong balance sheets for higher income households to show market resilience. But hiring has slowed and consumer confidence remains depressed.”  

The economy grew 1.4% in the fourth quarter of 2025, according to the Bureau of Economic Analysis’ estimate, meager growth compared to the 4.4% seen in the previous quarter. “The economy slowed more than expected in the last few months of 2025 under the weight of the government shutdown,” Morris said. “In the third quarter, consumer spending and investment were the primary drivers of growth, with trade contributing only marginally. Government spending during the shutdown, or lack thereof, was a major drag, with the BEA estimating the shutdown contributed to a 1% reduction in growth.”  

As businesses respond to increased economic and geopolitical uncertainty, more customers are seeking credit. “The savings rate fell from 4.2% to 3.6% from the third to fourth quarter, signaling that more customers were reaching for credit as businesses were holding off on spending and hiring,” Morris said. “There is a growing divide between the assessments of the economy’s performance purely based on an economic perspective. Judging the performance on healthy to strong GDP growth seems to show the economy is doing well. However, based on job reporting and how Americans feel about their personal finances, the economy is lagging, if not faltering.” 

A big source of frustration for Americans is the weakening job market, with the pace of hiring dropping off in early 2026. The Labor Department reported that the overall number of hires in December reached 5.3 million, according to the Wall Street Journal, with a hires rate, or the number of hires employers made as share of employment, reaching 3.3%. “Outside of a recessionary period, 2025 was the weakest data set for U.S. job growth in 20 years,” said Morris. “Previously, this period was dubbed the ‘don’t hire, don’t fire’ period. I think that’s coming to an end, and we’re looking more at hire selectively, if you need to, but be a little more cautious about whether or not you have backfill for certain jobs.” 

As geopolitical conflict pushes the price of gas further into the forefront of economic conversations, it is important that credit professionals understand exactly how rising oil prices can send shocks through their domestic and international operations.  

“The other wild card is higher energy prices due to the war,” Morris said. “If sustained, this could drive up inflation, curb household spending and damage the economy not just in the U.S., but across the world. Central banks could be forced to keep interest rates on hold or tighten policy while other governments may face extra strain, including the U.S., if they decide to intervene in the energy markets.” 

Global banking operations remain stable, with projections for moderate growth in 2026, according to Morris. “Any stable operating environment will remain susceptible to geopolitical risk, trade tensions and a changing financial landscape,” Morris said. “Non-bank private credit markets will continue to challenge traditional banks and increase risk to financial stability.”  

The bottom line: In moments when the economic outlook appears murkier each day, credit managers are tasked with making smarter credit decisions to anticipate shifting needs from their customers.