Fed Loan Officers Survey Shows Demand Is Tumbling

Tyler Durden's picture

If ever there was proof that 'hope' is not a strategy, it is the 2017 Q1 Fed Senior Loan Officer Survey. Despite soaring confidence, spiking optimism, and striking gains in financial assets, demand for loans (from credit cards to autos to residential and commercial) have all plunged in the last 3 months.

Loand Demand collapsed across all asset classes in 2017 Q1

As Goldman Sachs notes, The Fed's Senior Loan Officer Survey for 2017Q1 showed that lending standards on commercial and industrial loans were largely unchanged. Standards on commercial real estate loans continued to tighten, while demand for construction and multifamily residential loans declined. Demand for residential mortgages weakened, while standards were little changed.

MAIN POINTS:

1. According to the Fed’s Senior Loan Officer Survey for 2017Q1, credit standards on commercial and industrial (C&I) loans were mostly unchanged. Relative to the prior survey, the net percentage of banks reporting tighter standards on loans to large and medium sized firms edged down (+1.4pp, from +1.5pp) while standards on loans to small firms were balanced (0pp from -1.5pp). Fewer respondents reported weaker demand from large and medium sized firms (0pp from -5.9pp) and from small firms (+1.5pp from -1.5pp).

 

2. On balance, commercial and industrial (C&I) lending standards remained unchanged while standards on commercial real estate (CRE) loans continued to tighten. A higher net percentage of banks reported weaker demand for construction and land development as well as multifamily residential property loans, while demand for nonfarm residential properties was roughly unchanged.

 

3. Relative to the last survey, lending standards for residential mortgage loans were mostly unchanged. Banks additionally reported weaker demand for most categories of residential mortgages, particularly for subprime and government loans.

 

4. The net percentage of banks reporting increased willingness to make consumer installment loans declined (+3.1pp from +12.5pp). Demand for these loans softened as well, particularly for auto and credit card loans.

 

5. This survey asked additional questions on the outlook for lending in 2017. Banks anticipate easier standards on C&I and residential loans and tighter standards for CRE and auto loans. Asset quality on C&I and residential loans are expected to improve somewhat, while the quality of credit card and auto loans is expected to deteriorate somewhat.

Charting some of the details makes the pain a little easier to comprehend...

Credit Card loan demand crashed... and standards tightened to near 7-year highs...

 

And even more problematic for the American economy - given the "inventory bubble" - Auto loan demand has plunged and standards are tightening drastically.

 

And finally while 'hope' remains Trumphoric, loan officers' "willingness to lend" signals a very different picture ahead for Small Businesses...

While "optimism" for sales and business outlooks soars near record highs, bank willingness to lend has plunged to 7 year lows!!

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USisCorrupt's picture

I'm with TRUMP !

Sonny Brakes's picture

The same bankster that wants you to be his slave is conspiring with your boss to replace your job with a robot. If you look around you'll notice that replacement opportunities to earn a wage are drying up. Some people are smart enough not to be debt slaves.

scv's picture

goldman ball sacks

jamesmmu's picture

Almost nothing ZH has mentioned show up at MSM, ppl are crazy right now, and MSM are cheerleading the market. It will end well. /s

BigFatUglyBubble's picture

This bubble might be the last party they get to have.  Then it's down into the underground bunkers to hide from the angry peasant hordes.

JailBanksters's picture

The lower it goes, the higher the chances of a War with somebody.

You might think this would be bad, but it's good. It will hire more people, increase Manufactoring and MAGA.

The bad part is it will create Death, Destruction, Carnage, Poverty everywhere.

But that's Good, because somebody will have to rebuild everything again ! MAGA AGAIN

BigFatUglyBubble's picture

Interesting tidbit: "Maga" means "combat" in hebrew.

Ban KKiller's picture

Just finance cars for one hundred twenty months. Problem solved? Remember when sixty months was thought to be outrageous?

pliny the longer's picture

its so obvious, just raise rates.  problem solved.  duh 

it gets old being the smartest guy in the room 

the fed has backed themselves into the mother of all corners, even with the printing press.