The U.S. is almost certain to suffer a "slow-growth recession," with corporate borrowers bracing for a sharp reversal in business conditions in the second half of the year and a more pronounced economic downturn in 2023. Still, credit quality has proven resilient, and most companies enjoy solid liquidity positions after highly favorable financing conditions allowed them to refinance at better terms. The risks are weighted to the downside. Companies continue to deal with sharply higher input costs—with a finite ability to pass along these costs. If pressures don’t ease, or if inflation begins to weigh heavily on demand, profit erosion will inevitably hit credit quality.