{"id":23284,"date":"2017-03-19T13:29:55","date_gmt":"2017-03-19T18:29:55","guid":{"rendered":"http:\/\/olduvai.ca\/?p=23284"},"modified":"2017-03-19T13:29:55","modified_gmt":"2017-03-19T18:29:55","slug":"bank-loan-creation-crashes-at-fastest-pace-since-the-financial-crisis","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=23284","title":{"rendered":"Bank Loan Creation Crashes At Fastest Pace Since The Financial Crisis"},"content":{"rendered":"

Bank Loan Creation Crashes At Fastest Pace Since The Financial Crisis<\/a><\/h3>\n
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Last weekend, after\u00a0looking at the latest H.8 statement\u00a0<\/a>by the Fed, we noted something concerning: total loans and leases by U.S. commercial banks were rising at an annual pace of about 4.6%, based on weekly Fed data. That is down from a 6.4% pace for all of last year and peak rates of around 8% in mid-2016. This is the slowest pace of debt creation since the spring of 2014. This deceleration has prompted numerous questions about the sustainability of the recovery, and\u00a0led the WSJ\u00a0<\/a>to noted that the slowdown, “is at odds with the idea of a stronger economy and rising sentiment.”<\/p>\n

But the slowdown was especially acute in the all important for growth Commercial and Industrial loan category, which after growing at a pace of 10% in the first half of 2016, had unexpectedly slowed to just 4.0%, nearly 50% lower than the 7% growth notched at the start of the year.\u00a0 This was the lowest pace of loan growth since July of 2011.<\/p>\n

Fast forward one week, when after the latest update to the Fed’s latest weekly commercial bank loan data, we find that the trends have deteriorated substantially.<\/p>\n

As shown in the chart below, after growing 4.6% one week ago, total loans and leases grew only 4.2% in the week ended March 8: the lowest growth rate since May 2014. However, it was once again the Commercial and Industrial loans creation – or lack thereof – which was more problematic, because after growing 4.0% on a year over year basis as of March 1, and 5.7% one month ago as of February 8, the growth rate has since tumbled to just 2.9%, a 1.1% decline in the growth rate over the past week.<\/p>\n

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