Weekly Global Economic Update: Insights on Private Credit and Global Economic Trends
Deloitte Insights | Week of April 13, 2026
This week’s global economic update from Deloitte’s team of economists covers key developments around private credit markets, inflation dynamics, consumer confidence, and ongoing disruptions due to COVID-19. Ira Kalish, Deloitte’s Chief Global Economist, shares analysis on risks and trends shaping the economic landscape.
Spotlight on Private Credit Growth and Potential Risks
Recently, private credit has attracted significant attention due to its rapid growth and the implications for the broader financial system. Jamie Dimon, CEO of JPMorgan Chase, remarked that losses in leveraged lending could exceed expectations during the next credit cycle owing to weakening credit standards across the board.
What is Private Credit?
The US Federal Reserve defines private credit as debt instruments not publicly traded and extended by nonbank entities like private credit funds and business development companies to finance private businesses. Unlike traditional banks, these lenders operate outside stringent regulatory frameworks, which increases the opacity and risk profile of the market.
The private credit market size in the US now ranges between $1.4 trillion and $1.8 trillion, skyrocketing from just $46 billion in 2000 and $1 trillion in 2023. Growth has been propelled by investors such as pension funds, insurance companies, private equity firms, family offices, and sovereign wealth funds. Private credit firms also augment their financial leverage by borrowing from banks, adding layers of interconnected risk.
Why Has Private Credit Expanded So Rapidly?
Post the 2008-2010 global financial crisis, regulatory reforms tightened capital buffers and lending standards for banks to mitigate risks from nonbank investment vehicles. However, over time, regulatory enforcement relaxed, allowing nonbank lending to rebound strongly. Market participants sought the speed, flexibility, and customization that private credit lenders offer, especially as many highly leveraged borrowers found traditional banks constrained in meeting their financing needs.
Understanding Systemic Risk from Private Credit
Debate continues over whether private credit poses systemic risk comparable to that seen in the 2008 financial crisis. Economist Paul Krugman notes that financial crises emerge from mismatches between liquid liabilities and illiquid assets — for instance, bank depositors demanding funds leading to liquidity crunches or, in nonbank finance, investors seeking loan repayments simultaneously, which can force asset fire sales.
Applying this framework to private credit:
- The private credit market is smaller relative to GDP than the nonbank securities central to the 2008 crisis.
- Funding for private credit mainly comes from investors, although there is notable dependence on bank loans.
- Some private credit firms incorporate redemption restrictions, which can curb sudden liquidity demands from investors.
A Federal Reserve Bank of Boston study highlighted potential systemic liquidity risks if many private credit lenders simultaneously draw on their bank credit lines during economic stress. This dynamic means private credit could expose banks to liquidity challenges indirectly.
Other Economic Highlights for the Week
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US Inflation & Consumer Confidence: Inflation in the United States has accelerated recently, accompanied by a sharp decline in consumer confidence, raising concerns about economic growth prospects.
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China’s Price Dynamics: While Chinese consumer prices remain stable despite external crises, producer prices continue to increase, indicating ongoing pressures within industrial sectors.
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COVID-19 Impact: The pandemic continues to disrupt supply chains and labor markets globally, adding uncertainty to recovery trajectories.
Deloitte Insights: Comprehensive Research and Resources
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Contact:
Ira Kalish
Chief Global Economist, Deloitte Services LP
[email protected] | +1 310 420 0392
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