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Bank lending update




Commercial and Industrial Loans outstanding at all U.S. banks (a proxy for bank lending to small and medium-sized businesses) continue to rise: up at a 6.6% annualized rate year to date, and up at a 7.8% annualized rate over the past six months. This suggests a) an increased willingness on the part of banks to lend (i.e., less stringent credit standards), b) an increased willingness on the part of businesses to borrow (i.e., less deleveraging), and/or c) an increased willingness on the part of all parties to assume greater risk. Whatever the case, this is good news for the economy, since a general aversion to risk has contributed to the slow pace of this recovery.

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