The combination of tighter financial conditions, higher interest rates, a slowing economy AND shrinking deposits due to a banking crisis (SVB, Signature Bank, FRC next ?) is now manifesting itself in materially lower loan growth. Lending growth hasn’t been this bad since just after COVID hit in 2Q20. Lower-er.
Not a newsflash but a recession looms. The recession may not be at the front door, but it’s coming up the walk and about to ring the bell. This lending data confirms such. Major banks start reporting Friday morning – their comments on what’s actually going on in commercial lending (most notably their office RE exposure) will tell whether a recession is imminent or already underway.
Source: Dallas Federal Reserve as of April 12, 2023
Chief Investment Officer
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