US lending 'meltdown' shows big investment slump is underway: economist

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US lending 'meltdown' shows big investment slump is underway, economist says

A slump in short-term credit flows to US businesses is underscoring growing risks to the world's largest economy, according to one economist.

Credit conditions in the US economy have tightened this year, with banks raising lending standards after the collapse of Silicon Valley Bank in March unleashed a wave of turmoil across the sector. Furthermore, a sharp surge in US interest rates since early 2022 has made borrowings much more expensive, potentially damping demand.on Sunday."Cumulative C&I lending is -1.0% since the start of 2023. Median growth by this point in the year is +4.5%, while 2022 was up +9.3% by this point.

However, credit costs have climbed significantly over the past year or so, as the Federal Reserve raised benchmark interest rates aggressively to rein in runaway inflation. The central bank has boosted its policy rate by 500 basis points since March 2022.

 

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