Sunday, May 24, 2009
While I'm waiting for lunch to be ready, I thought I would post this update (with data through April '09) of a chart showing consumer loans at all commercial banks. Lending did drop by about $11 billion in April versus March, but as the chart shows, the growth of lending over the past year has still been above average. I think this chart still supports the theme I started last September, to the effect that it is not the case that banks have stopped lending or that there has been some sort of massive credit implosion. The Fed has taken extraordinary steps to ensure that money is plentiful. What has been lacking is confidence, and that is now returning. We do see some modest reduction in bank lending of late, but I think that is fully consistent with the obvious attempts being made all over the world to deleverage. People and corporations are paying down debt and saving more, and governments are picking up the slack. There is nothing sinister going on.
Posted by Scott Grannis at 12:45 PM