Tuesday, August 29, 2017

Banks Send Warning Signs for Economy

 
By Aaron Back 

U.S. banks are sending signals that the country’s economic expansion is getting long in the tooth.

Being a key transmission mechanism for savings, investment and spending, the banking sector is worth watching as a barometer for the health of the overall economy. Lately it has been acting as one would expect toward the end of an expansion phase.

Most glaringly, after strong lending growth for several years, momentum clearly is slowing. In its quarterly report on the sector, the Federal Deposit Insurance Corp. found that total loans and leases by banks and other insured institutions rose by just 3.7% from a year earlier at the end of June. That is the third consecutive quarterly deceleration and is down from a 6.7% pace of growth a year ago.

In a statement, FDIC Chairman Martin Gruenberg explicitly linked the slowdown to the fact that the economy is now in its ninth year of expansion. But it is more than just a symptom. Slower lending growth means less fuel for business investment and personal consumption, potentially weighing on economic performance.

Click here for the full article. 

Source: The Wall Street Journal

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