Economic Report
Deposits also rise slightly amid renewed worry about the U.S. banking sector
People walk by a First Republic bank in San Francisco. The bank’s stock has plunged amid worries about its survival.
The numbers: Total bank lending rose to $12.1 trillion in the seven days ended April 19 from $12.09 trillion in the prior week, the Federal Reserve said Friday. This is the third straight weekly gain.
Deposits at banks rose slightly to $17.20 trillion from $17.18 trillion in the prior week. They are down from $17.26 over the past month.
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The recent economic report released by the Federal Reserve shows a third consecutive week of an increase in bank lending. The loan balances across all major categories of borrowing rose to $15.81 trillion. Commercial and industrial loans, which include loans to businesses, saw a surge of $2.6 billion, while consumer borrowing grew by $2.2 billion.
These results indicate that the economy is gaining strength, as businesses are more willing to lend and consumers are looking to borrow more. The latest Report highlights that the current economic recovery is largely driven by improving business confidence fueled by the additional U.S. fiscal stimulus and the extensive vaccine rollout in many countries.
The increase in bank lending has been welcomed by the Federal Reserve, but there are some areas of concern. Although the latest report indicates a rosy outlook on the US economy, it also suggests that the lending growth is being driven mainly by larger lenders, meaning that smaller businesses do not have access to credit as much. This could hamper the economic recovery if access to credit for small businesses is not widened.
In addition, the Report notes that loan balances for real estate and construction are still not showing signs of strong growth, which could be a sign of weak demand for such services. This could hurt the US economy in the long-term, since housing and the construction sector have always been the main driver of economic activity.
Overall, while the recent economic report points to some areas of improvement, it shows that there are still some challenges ahead. Overall, the Federal Reserve will continue to monitor these indicators as the roadmap to economic recovery becomes more clear.
