U.S. Outlook: What is going on with bank credit?

Scott Anderson
Posted by Scott Anderson
Chief Economist

Consumer confidence is near 17-year highs, and business confidence is up.

Graph showing recent dip in commercial bank lendingYou would think banks would be busy making new loans in this sort of economic and financial environment, but you would be wrong.

For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on Nov. 10.

Key observations:
  • Loan demand is slowing across nearly all loan categories, and credit standards around consumers are being selectively tightened.
  • Overall commercial bank credit growth fell to 3.15% from a year ago in October.
  • Demand for auto and credit card loans were basically unchanged from the previous quarter.
  • The Fed’s rate hikes, so far, have significantly flattened the Treasury yield curve, reducing the profitability and appetite for new bank lending.

Read my full report.

 

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