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Outstanding Commercial & Industrial Loans at U.S. banks have been growing at double-digit rates for the past six months, with no slowdown yet apparent. Over the past 3-6 months, loans have been growing at annualized rates of over 15%. This is one of the more impressive stories in the U.S. financial markets these days. Banks are using some of their $1.5 trillion of excess reserves to make new loans. Banks are more willing to extend credit, and businesses are more willing to take it on. This is a very positive sign because it reflects increased confidence all around and a decline in systemic risk.
8 comments:
And is it not potentially inflationary...?
Interestingly, the largest banks in the US are curtailing lending -- more at:
http://www.bloomberg.com/news/2012-06-26/biggest-u-s-banks-curb-loans-as-regional-firms-fill-gap.html
Clearly, the nation's "too big to fail" banks have abandoned America, which is fine with me -- I don't trust them either...
I confess I am surprised (happily) at the strength of th indicator. Most small businesses cannot get a loan without collateral, and that means real estate, and we know the state of real estate.
If we can get a commercial real estate rebound, this indicator should take off.
Commercial and industrial loans are only about 15% of bank credit. Total bank credit is only expanding by 5% per year. See Federal Reserve H.8 Table 1 for change and Table 2 for levels.
Let me guess. Commercial and industrial loans are highly correlated to business fixed investment with a lag.
Well lo and behold.
well, lending what for ?
http://www.bloomberg.com/news/2012-07-02/ism-index-of-u-s-manufacturing-decreased-to-49-7-in-june.html
More pain ahead:
More Pain For Global Manufacturing In June https://www.facebook.com/media/set/?set=a.378276832226586.91001.103632406357698&type=1
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