U.S. Outlook: Senior loan officer survey results suggest caution

Scott Anderson
Posted by Scott Anderson
Chief Economist

Earlier this week, the Federal Reserve released results from the January Senior Loan Officer Survey on Bank LendingA view of British pedestrains at a road crossing, from directly above. Practices over the past three months. Given the timeliness of the survey data, the results provide an early indication of the willingness of consumers and businesses to borrow and banks to lend this year.

It’s apparent in the latest survey results that weak loan demand persists, and is broad-based across both consumers and businesses. Indeed, banks reported that demand for commercial and industrial (C&I) loans remained weak in the fourth quarter of 2018.

For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on Feb. 8.

Key observations:
  •  A majority of the banks that reported weaker loan demand stated that decreases in customers’ needs to finance mergers and acquisitions and investment in plant and equipment contributed to weaker demand, as did a shift in borrowing toward other bank or nonbank sources.
  • Banks reported that lending standards tightened in the fourth quarter for numerous categories, from C&I loans to commercial real estate loans to credit card and other consumer loans.
  • The deteriorating lending environment anticipated this year is consistent with our forecast for slower GDP, consumer spending, and business investment growth this year.

Read my full report.

C and I Loan Demand

 

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