Main menu

Bank lending points to continued growth

Continuing evidence of an important change on the margin: Commercial & Industrial Loans (bank loans to small and medium-sized businesses) have been rising at an annualized rate of 5.8% for the past six months. This is important evidence of growing confidence among the nation's banks and among smaller businesses. The recession was largely the consequence of a huge loss of confidence in the global banking system, and a pronounced reluctance of banks to lend and businesses and individuals to borrow (manifested in a significant deleveraging of the economy). Therefore an important component of the recovery has been the recovery of this lost confidence. We had a panic-induced plunge in economic activity, and we are still in the midst of a slow but steady process of rebuilding that confidence.

There is still lots of room on the upside, since markets are still characterized by caution, not optimism. Bank lending is only in the early stages of a recovery, and the economy's demand for liquidity (manifested by the desire to deleverage) is still strong.

Filled Under:


Posting Komentar