Lenders grow cautious amid political and geopolitical risks ahead of Fed decisions

Following the US Federal Reserve’s meeting on 10 December, a quarterly survey conducted by Phoenix Management, a part of J.S. Held, portrays a lending community growing more cautious about near‑term economic prospects and increasingly worried about political and geopolitical risks.

According to the announcement, Phoenix’s Q4 2025 “Lending Climate in America” survey found that 46% of lenders regard political uncertainty as the single largest potential drag on the economy over the next six months, with a further 41% citing geopolitical risk, including war. Lenders also flagged the possibility of a US recession and forthcoming FOMC interest‑rate decisions as material concerns. The firm said in a statement that lender optimism for the US economy slipped from a weighted short‑term score of 2.58 in Q3 to 2.38 in Q4, while longer‑term expectations fell from 2.71 to 2.46.

The survey indicates lenders expect borrowers to respond conservatively: almost two thirds anticipate their customers will seek additional capital in the next six months, and more than 30% expect customers to introduce new products or pursue acquisitions. The company claims 77% of respondents expect further Federal Reserve rate cuts in the coming months, even as 21% said their own institutions plan to tighten loan terms.

Lenders identified sectors likely to face the most volatility in the near term. The press release notes retail trade at the top of the list, followed by healthcare (social assistance). Other material summaries of the survey expand that view to include restaurant and hospitality, consumer products and services, and finance, suggesting a broader set of consumer‑facing industries may be vulnerable as spending slows.

Changes to loan structures vary by size, the announcement said. For larger facilities above $25m, plans to maintain existing structures rose modestly from the previous quarter; mid‑sized facilities in the $5–25m range showed similar patterns of little net easing, and loans under $5m saw no change quarter‑on‑quarter. The company said these adjustments reflect a preference among lenders to preserve underwriting standards while selectively tightening where risk is perceived to be higher.

Michael Jacoby, Senior Managing Director and Strategic Advisory Practice Lead at J.S. Held, summarised the mood: “Lenders are signaling heightened caution as political uncertainty and geopolitical risks dominate near‑term economic concerns,” he said. “Confidence in the U.S. economy continues to erode, with short‑term grades slipping from a weighted average of 2.58 in Q3 to 2.38 in Q4, and long‑term expectations following the same downward trend. While most lenders plan to maintain current loan structures, a notable 21% anticipate tightening terms, even as 77% expect further Fed rate cuts in the coming months. Industry volatility is projected to rise sharply in healthcare, consumer products, and finance, underscoring a challenging environment for borrowers and investors alike.”

The latest quarter’s results reverse the more optimistic tone registered mid‑year, when lenders had reported improved expectations and reduced recession fears. Across 2025, surveys have oscillated with shifting concerns, from tariff and policy uncertainty earlier in the year to the present emphasis on political and geopolitical developments, underlining how macro‑political factors are now central to lenders’ risk assessments.

The Phoenix survey is presented as a quarterly pulse of senior banking professionals’ views. Its findings point to a lending market that is braced for volatility: institutions expect clients to seek capital, yet many lenders plan to hold or modestly tighten underwriting, which may restrain credit availability for at‑risk sectors as the economy enters a period of heightened uncertainty.