U.S. Outlook: Unclogging the credit channel
Is the U.S. bank credit channel finally unclogged? The latest data from the Federal Reserve suggests things are looking up for banks, borrowers and the economy. Based on its survey of bank senior loan officers, the Fed said it sees a “broad-based pickup in loan demand.”
Ever since the financial crisis hit in 2007, bank credit has been hampered by weak demand for credit and tightened lending standards. This has contributed to lackluster economic growth. But bank senior loan officers surveyed in July indicated things have perked up.
For more on this and other economic developments to watch, see highlights of my weekly economic analysis below, followed by a link to the full U.S. Outlook report, delivered on Aug. 8.Key observations:
- American consumers now have fewer obstacles to obtaining a wide-range of credit products.
- Firms, both large and small, have more banks competing to lend them money for business investment projects.
- Banks have further eased some of their lending standards and terms on their loans to stay competitive.
- A better functioning bank credit channel is good news and will help reinforce the U.S. growth trend.