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Bank lending continues to accelerate




Bank lending to small and medium-sized business is still accelerating. The six-month annualized rate of growth is now at 15.4%, a post-recession high. The 13.6% year over year growth of C&I Loans is also at a post-recession high. This is undeniably a sign of increasing optimism among both banks and businesses, and that in turn is a good sign that the economy is still growing.



Meanwhile, the annual growth in savings deposits at U.S. banks has been running at double-digit levels since April '09. Clearly, the demand for safe-haven cash remains very strong, even as the economic fundamentals continue to improve. I suspect that much of the increase in savings deposits in the past 9 months comes from Europe, since that is where legitimate concerns about the future of economic growth still reside. As confirmation of this, 2-year swap spreads in Europe are still elevated, while U.S. swap spreads are still in "normal" territory.

So these charts continue to reflect the disconnect between improving conditions in the U.S. and still-precarious conditions in Europe.

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