Chart: Percentage of Banks Tightening Standards for Commercial & Industrial Loans

Board of Governors of the Federal Reserve System (US), Net Percentage of Domestic Banks Tightening Standards for Commercial and Industrial Loans to Large and Middle-Market Firms [DRTSCILM], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/DRTSCILM, May 5, 2023.

The chart above, retrieved from the St. Louis Fed FRED system, illustrates the net percentage of domestic banks that are tightening their standards for commercial and industrial loans to large and middle-market firms.  This data series is part of the Board of Governors of the Federal Reserve System’s Senior Loan Officer Opinion Survey on Bank Lending Practices, referred to as SLOOS. The purpose of the SLOOS is to provide qualitative and limited quantitative information on bank credit availability and loan demand, and also evolving developments and lending practices in the United States commercial loan markets.

The spike in tightening of late is surely no surprise to market participants; it may even seem to underrepresent current tightening. As can be seen, this is the least drastic, so far, of 5 major spikes since 1990. That this is least drastic may be as it is not accompanied by a recession. I should of course say “not yet accompanied by a recession;” whether we can escape a recession as we digest the pandemic related stimulus, i.e. as we tamp down inflation, remains to be seen.