The U.S. banks saw a historic drop in lending in the final weeks of March, one not seen in the last 50 years. The slump was likely influenced by the recent banking crisis and fears over the troubling economy.
According to Federal Reserve data, lending in the U.S. had a $105 billion slide over the last two weeks in March, the most since 1973. The lending decrease was widespread, affecting commercial, industrial, and real estate loans. Commercial and industrial lending fell by around $68 billion, while commercial real estate loans dropped by $68 billion.
The smaller US banks, which are considered the most important providers of credit overall, significantly attributed to the drop, accounting for $73.6 billion. The 25 of the nation’s biggest banks, on the other hand, experienced a $23.5 billion decrease in lending while lending by foreign institutions fell by a combined $7.5 billion.
You can read detailed data and access Fed’s full report here.
The lending has already experienced tightening in recent months due to interest hikes the Fed employed in an attempt to fight inflation. Analysts expect a similar trend to continue in the future, with businesses and households facing even bigger challenges in order to secure credit.