Lenders are tightening underwriting criteria due to high delinquencies among consumers and small businesses amid inflation. People are revising their spending and investment plans. While technology companies thrive, sectors like logistics, utilities, and healthcare face challenges. Supply chain issues are easing, but reduced demand affects inventory orders, impacting trucking and logistics with lower tonnage and mileage. Consumers show resilience, bolstered by a strong job market, wage growth, and lower energy and food costs. However, dwindling savings and increased reliance on unsecured debt, along with the resumption of debt obligations like student loans, and ongoing inflation, put pressure on consumers. Recession fears are easing, but concerns for 2024 remain.

The Summer 2023 report contains several insights on the economic landscape impacting small businesses, among them — rising delinquencies being a significant concern. The latest report emphasizes the need for strategic planning and careful management of debt, along with an understanding of broader economic factors that may impact small business performance.

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Q1 GDP grew by 1.1% annualized, following a 2.6% gain in Q4 2022. However, recent data's accuracy is affected by weather-induced consumer spending and unusual seasonal adjustments. Notably, Q1 GDP doesn't reflect the impact of tightened lending standards yet. The core of the economy, measured by real final sales to domestic purchasers, rose by a solid 2.9% annualized, driven by strong consumer spending concentrated in early Q1 and aided by significant cost-of-living payments. Inventory reduction subtracted 2.3ppts from Q1 GDP growth, and this trend is expected to persist as businesses draw from existing stockpiles to meet demand. The Oxford Economics US Business Cycle Indicator declined for two consecutive months, indicating weak Q1 performance. The indicator suggests feeble Q2 growth and a possible H2 2023 recession.