The most oft-heard description of the current economic recovery is "slow." (Nonexistent is a distant second.) And hot on the heels of another disappointing jobs report, which put unemployment about 10% for the first time in 26 years, here's some more evidence that the economy may eventually recover fully at some point in the next decade.
The Fed went around and talked to a bunch of banks, and found that only some of them are still tightening credit standards. Which I guess means that the credit crisis is only getting slightly worse more than two years on.
To its credit, the Fed didn't exactly try to sugarcoat the news that only 15% of lenders--be they commercial, industrial or credit-card--were making it tougher to get their money. The central bank said the "tight credit" market is keeping the economy down, and is likely to do so for an "extended period."
Banks may have, for the most part, stopped tightening their loan terms, but, with the exception of prime residential mortgage-seekers, there don't seem to be all that many takers for the loans that they are offering. Demand for loans continued to weaken at banks, albeit at a smaller number.
The Fed is trying to get to the bottom of this conundrum: Asking a special question in the October Senior Loan Officer Opinion Survey, Ben's boys learned that banks are originating fewer commercial and industrial loans, and that those who have them aren't using their revolving credit lines that much. Meanwhile, those loans outstanding are getting a little long in the tooth: About three-quarters of banks told the Fed they had extended more than one-quarter of construction and development loans set to mature in September.
So this holiday season, spend, Streeters, spend. Nobody else will be.
Fed Says Fewer Banks Tightened Lending Standards in 3rd Quarter [Bloomberg]