According to the result of the American Financial Services Association’s latest Consumer Credit Conditions Index Survey, its member companies judged the current business environment to have turned slightly negative in the third quarter of 2025. But that’s not the whole story.
The survey noted that more respondents reported business conditions worsened than reported they improved. That drove the Net Increasing Index (NII) – the percentage of respondents reporting conditions improved minus the percentage reporting they worsened – to a score of negative 5.9.
That result followed four consecutive positive quarters, AFSA said.
View of the Next Six Months Has Improved
In contrast, AFSA said the view on the outlook for the next six months improved significantly in the third quarter.
The NII was +20.6, up from 0.0 in the second quarter, and its strongest reading since the fourth quarter of last year, AFSA said.
The association said that against a complex economic backdrop that saw deterioration in labor market conditions together with an elevated, but stabilizing, pace of inflation, consumer lenders said that loan demand weakened in the third quarter compared to the second quarter.
The resumption in September of short-term interest rate reduction by the Federal Reserve, along with the continuation of a downward trend in long-term rates, contributed to an improvement in lenders’ funding costs, AFSA said.
Indications of easing financial conditions, including further interest rate cuts are fueling positive expectations for overall and subprime loan demand and continued improvement in funding costs, AFSA said.
