Editor’s Note: Small business owners are used to uncertainty, but lately it seems like every headline brings a new challenge. Consumers are feeling stretched, global conflicts continue to affect energy prices and supply chains, and businesses are trying to plan in an environment where the rules seem to change by the week.
In this month’s Credit & Consequence, Dean Lyulkin and William Stern offer their perspectives on what they’re seeing in the markets, the economy, and the lending environment. As always, you may not agree with everything they say—and that’s fine. The goal isn’t agreement. It’s understanding the forces shaping today’s business landscape and considering what they might mean for the months ahead. —Rieva
Is the Consumer Finally Running Out of Steam?
For years, consumer spending has helped keep the economy moving. But William Stern argues that the strength we’re seeing in the data may not reflect what’s happening on Main Street, where many consumers and business owners are feeling the effects of inflation and rising debt.
The macro data is totally detached from reality. Wall Street sees retail sales ticking up and assumes the American consumer is thriving. They aren’t. Everything just costs 40% more than it did a few years ago. People aren’t buying more things. They are actually buying less stuff and just paying a massive premium to get the basics.
I see the ground-floor reality of this economy every single day. Main Street is completely maxed out. Credit card debt is sitting at historic highs, and consumer confidence is essentially in the gutter. The only reason big corporate revenues look strong right now is that the top 20% of earners are artificially holding up the average. The other 80% of the country is literally putting their daily survival on plastic. The consumer isn’t strong. They are just leveraged to the hilt. —William Stern
Consumers are entirely tapped out right now. They’re cutting back because permanent inflation totally destroyed their purchasing power. I look at actual balance sheets every single day. Everyday operators aren’t waiting for a miraculous fourth quarter rebound. They’re aggressively slashing their overhead today. But when the second consumer demand gets unpredictable, the legacy banks completely panic. They immediately shut off access to working capital right when these guys actually need it to pivot. You can’t survive a consumer pullback if Wall Street cuts your credit line at the exact same time. It’s absolute institutional cowardice. The businesses actually surviving right now are the ones entirely ditching traditional banks for private capital that actually understands daily cash flow. —William Stern
The Ripple Effects of Global Conflict
The reopening of the Strait of Hormuz may ease some immediate concerns, but lingering disruptions to shipping, oil production, and global trade continue to create uncertainty for businesses that rely on stable supply chains and energy costs.
We’re looking at an absolute logistical nightmare trying to untangle over 1,500 ships backed up in the Gulf. This isn’t a simple traffic jam where you just wave the tankers through. They have to physically clear naval mines, check engines that sat dead for months, and sequence massive ultra-large carriers that take miles just to come to a stop. It’s absolute chaos out there.
And the shipping logjam is only half the problem. You can’t treat an oil well like a kitchen faucet and just turn it back on. Shuttering those regional fields caused massive pressure drops and severe structural damage down in the wells. Realistically, some of those assets in Iraq and Kuwait might never get back to their previous production levels. Expecting a quick recovery is totally delusional. This is a massive, structural supply drag that’s going to choke the energy markets straight into 2027. —William Stern
Why Energy Prices Matter to Every Business
Most small business owners don’t work in the energy sector, but energy prices affect nearly every part of the economy—from transportation and manufacturing to food costs and inflation. Dean Lyulkin explains why oil markets remain a critical indicator to watch.
Three straight months of gains [in the Oilfield Services Employment Report] would be impressive if it weren’t for the obvious oil shock happening in real time. It seems that these companies are staffing up for durability. Higher prices could be with us for a lot longer than we thought a month ago, when an end to the conflict looked more certain.
The most telling part of the picture is what’s happening underneath the headline. U.S. rig activity has been flat-to-down, while employment is rising. That divergence says the growth is being driven less by drilling more wells and more by service intensity and productivity.
These are well-paying, geographically concentrated jobs. The industry now expects demand to hold, but isn’t betting on a price spike. That’s a disciplined approach investors should appreciate. We think the sector has internalized the lesson that profitability beats volume. It wasn’t always this way in this boom-and-bust industry. —Dean Lyulkin
The more important issue isn’t that the Strategic Petroleum Reserve (SPR) is being used. Strategic inventories are shock absorbers. When they decline, energy markets become less resilient to future disruptions. That doesn’t just affect gasoline prices. Higher lead-for-longer, more volatile energy costs eventually lead to stickier inflation as they permeate transportation, manufacturing, food production, fertilizers, plastics, and other goods across the economy.
The U.S. still produces roughly 13-14 million barrels per day. We are not in the same position we were in during the 1970s. Tighter inventories are the difference between a geopolitical event moving oil $5-10 and $20-40. We think Middle East flows will normalize soon, and the SPR will be gradually replenished. —Dean Lyulkin
What’s Supporting the U.S. Dollar?
Artificial intelligence, interest rates, and the dollar’s role as the world’s reserve currency are all helping support the strength of the U.S. dollar. But what does that mean for businesses, investors, and the broader economy?
The AI trade makes the US the preeminent destination for global capital. This certainly supports the dollar, but it alone does not paint the full picture. The DXY is sitting around 99, right in the middle of the range established over the past 40 years. The gravitational pull of relative interest rates is another important pillar of the strong-dollar story. Two-year Treasuries are around 4%, roughly 140 basis points above Germany and 260 basis points above Japan.
Even with 10-year Treasuries, the U.S. is at 4.46, against Germany at 3.0 and Japan at 2.7. The UK out yields the U.S. across the whole curve, but that is a fiscal premium, not sterling being a more attractive home for reserves. Finally, the third leg of the stool is the status of the dollar as a global reserve currency. We have the deepest market, the safe haven bid, and stronger economic growth to boot.
The dollar is at 99, not 89, so much of this is arguably already priced in. I treat the AI trade as something that puts a floor under the dollar and justifies holding dollar exposure unhedged at the margin. —Dean Lyulkin
Is the Housing Market Finally Shifting?
After years of affordability challenges, some housing markets are beginning to see price declines and rising inventory. Dean Lyulkin believes lower interest rates could eventually create new opportunities for buyers—but perhaps not in the way many people expect.
According to the S&P Cotality Case-Shiller Index Report, more than half of the top 20 U.S. metropolitan housing markets posted year-over-year price declines in March 2026. Let’s put the math behind a 2.5% price decline in perspective. On a typical home, that move changes a buyer’s monthly payment by roughly the same amount as a quarter-point change in the 30-year rate.
In isolation, these declines are nothing to write home about. Buyers must note that prices and rates have been moving in opposite directions in several of these markets, which can cancel each other out entirely. It doesn’t take a genius to figure this keeps mortgage brokers’ phones from ringing. Just look at the shares of companies like TREE and UWMC, and the story becomes clear as day.
Looking forward, buyers have to pay close attention to inventory. Price declines are concentrated in exactly the markets where supply is piling up. Seattle inventory is up around 22% year over year. Denver is sitting roughly 73% above where it was three years ago, and Texas is carrying its highest inventory in years.
We expect the Warsh Fed to begin moving short-term rates in a favorable direction for home buyers despite the current consensus to the contrary. That should provide a serious tailwind for the buyers who felt sidelined for years. They will get a major victory as lower rates and lower prices eat away at their prospective mortgage payment. Then the mortgage brokers’ phones might start to ring.
The part that runs against the usual narrative is important. If rates come down, that will probably accelerate the declines in these supply-heavy metros rather than reverse them. Lower rates unlock sellers who have been sitting on cheap mortgages, and that fresh inventory tends to flood in faster than the new demand can soak it up. —Dean Lyulkin
Dean Lyulkin is the founder of The Dean’s List, a San Diego–based registered investment advisory firm focused on capital markets research, portfolio strategy, and long-term wealth building. He works with investors and entrepreneurs to help them better understand how economic cycles, credit markets, and policy decisions shape real investment outcomes.
Dean frequently writes and speaks about financial markets, private credit, interest rates, and the intersection between investing and business growth.
William Stern is the founder of Cardiff, a San Diego–based small business lender focused on speed-first capital and technology-driven underwriting. Since 2004, he has helped businesses access funding more quickly through AI-powered credit models and modern lending infrastructure.
Cardiff was named America’s Favorite Small Business Lender (2024–2025) and won the Digital Bankers Global SME Banking Innovation Award (2026).
William often shares insights on small business finance, credit markets, entrepreneurship, and economic trends affecting founders and operators. He also hosts the A Stern Talk podcast, where he speaks with entrepreneurs and investors about business growth, leadership, and navigating changing market cycles.
Photo courtesy Frank van Hulst for Unsplash+
