U.S. bank lending slumps by most on record in final weeks of March

It&#x27;s interesting that many of us here are programmers and understand that debugging becomes exponentially more difficult as you add a number of variables beyond 1 to your deductive tests.<p>Yet when it comes to the economy, which is the product of an unfathomable number of variables, from the same people there are consistently these confident assessments of why we see x, y, z and what will happen.<p>It&#x27;s worth discussing those things to the best of our ability, but we should have a tone of our confidence in these types of assessments that&#x27;s commensurate with reality.

I think this is just a temporary slump caused by the SVB failure. The economy is not doing great but it is not in a complete metldown.<p>I do expect interest rate to continue going up: inflation seems to be quite stubborn.

When the article says, “Commercial bank lending dropped nearly $105 billion in the two weeks ended March 29, the most in Federal Reserve data back to 1973,” and later also notes that banks “divested” themselves of billions of dollars in loans, where is the money going?<p>Are they selling the loans off their books to third parties? Or are they just refusing to make new loans that they would have otherwise consistently made?

The largest nominal drop on record. Is it also the largest percentage-wise drop?

in case it wasn&#x27;t clear from the terrible headline, this is about all United States banks, not U.S. Bank.

This wildly overstates the situation.<p>1. These are seasonally adjusted numbers. The unadjusted numbers are smaller.<p>2. The article does not account for the $60b in loan sales (unadjusted) to nonbanks the week of 3&#x2F;22.<p>Lending definitely tightened up the week ending 3&#x2F;22, but not to the extent the article suggests

The days of cheap capital are over, and not because of the Fed.<p>The largest generation, boomers, are now retiring. Up until now they&#x27;ve been pumping money into the economy and the investing with their 401k and things like that. Now that trend is reversing as they retire they are taking money out of the 401k, out of their life savings, at the same time their purchasing power is decreasing.<p>The end result is a lot less capital than ever before, capital is now more expensive. Tighten your belts boys a prolonged slump is coming.