Navigating Uncertainty: A Conversation with Michael Lamm on the 2026 Economic Outlook

At the Auriemma Roundtables Credit Risk Summit, Michael Lamm, Co-Founder and Managing Partner at Corporate Advisory Solutions, laid out a clear message: the current environment entails multiple forces hitting at once.

We sat down with Michael to unpack what’s changing, what lenders may be underestimating, and where to focus next.

Q: At a high level, how would you describe the current economic environment?

Michael Lamm:
We entered 2026 with slowing growth, weaker hiring, and cooling consumer momentum. Since then, geopolitical conflict, rising energy prices, and shifting policy decisions have added new pressure.

Lenders now face a more volatile environment where inflation can shift quickly based on external events and policy decisions, making it harder to plan around performance risks.

Q: What’s driving the increase in economic uncertainty right now?

Michael Lamm:
There are a few things happening simultaneously.

First, the Iran conflict has pushed energy prices higher, which feeds directly into inflation. That ripples through everything: transportation, food, housing, and ultimately borrower cash flow.

And then you have policy uncertainty: changes in trade authority, a Fed leadership transition, and shifting fiscal policy. All of that makes it harder to move forward with confidence.

Q: How is the U.S. consumer holding up under these conditions?

Michael Lamm:
The consumer is still spending, but the underlying signals are deteriorating.

You’re seeing record-low confidence levels, rising reliance on revolving credit, and increasing minimum payment behavior. That tells you households are under pressure, even if top-line spending hasn’t dropped yet.

What’s important is that this pressure isn’t evenly distributed. Higher-income households are relatively insulated, but lower-income and rate-sensitive borrowers are in a very different position with depleted savings, rising delinquencies, and increasing exposure to cost shocks.

Q: You mentioned a “K-shaped consumer.” What does that mean in practice?

Michael Lamm:

On one side, you have borrowers with assets, fixed-rate debt, and income stability. They’re holding up. On the other, you have borrowers who are much more exposed to variable costs and debt burdens, and they’re starting to show real stress.

That divergence matters because aggregate portfolio metrics can look stable while risk is building underneath in specific segments.

Q: Student loans came up as a major theme. Why are they so important right now?

Michael Lamm:
They’re one of the most underappreciated pressures in the system.

You already have about a quarter of borrowers behind on payments, and projections suggest that number could grow significantly by the end of 2026.

What makes this different is the downstream impact. Defaults aren’t contained within student loans. They affect credit scores, which then impacts performance across credit cards, auto, and mortgage.

There’s also a tax component tied to forgiveness that isn’t always captured in traditional models. That creates an additional layer of cash flow stress that can catch lenders off guard.

Q: What early warning signs should lenders be watching most closely?

Michael Lamm:
There are a few signals that matter right now:

• Rising delinquencies across products
• Increased minimum payment behavior
• Softening discretionary spend
• Deposit drawdowns in lower-balance accounts

Individually, none of these are new. But together, they point to a broader shift in borrower health.

Q: How should lenders be thinking about credit demand in this environment?

Michael Lamm:
Demand is still there, but it’s changing.

More of it is need-driven rather than growth-driven. Consumers are borrowing to cover gaps, not to finance expansion or discretionary purchases.

That changes the risk profile at origination. You’re seeing a higher proportion of financially stressed borrowers entering portfolios, which requires more scrutiny upfront.

Q: What are the biggest mistakes lenders could make over the next 12–18 months?

Michael Lamm:
Relying too heavily on aggregate metrics.

In a K-shaped environment, averages hide what’s actually happening. You need more granular segmentation and earlier detection of stress.

The other mistake is waiting for losses to materialize. By the time that happens, you’re reacting instead of managing.

Q: What should lenders be doing now to prepare?

Michael Lamm:
Stress testing needs to reflect the reality persistent inflation, limited rate relief, and a potential wave of student loan defaults hitting later in 2026.

But more importantly, lenders need to focus on identifying where pressure is building before it shows up in headline metrics.

The institutions that perform best will be the ones that act early, not the ones that wait for confirmation.

Closing Thoughts

As Michael Lamm outlined, slowing growth, persistent inflation, policy uncertainty, and borrower stress are all interacting in ways that make traditional signals harder to interpret.

For lenders, the challenge lies in seeing those connections early. Connect with us to learn how Roundtables benchmarking and peer insight can help you cut through the noise and make more confident decisions in an increasingly uncertain credit environment.