The net percentages of senior bank loan officers reporting tighter credit standards on loans to businesses and residential mortgages declined between October and January, according to the Federal Reserve’s latest survey – see first chart. However, the balances remain above the peaks reached in the 1990-91 and 2001 recessions.
The second chart shows the annual rate of change of industrial output and an average of the net percentages of loan officers reporting tighter standards on loans to large / medium and small firms, plotted inverted. Turning points in the latter series lead the industrial cycle. The latest small change is consistent with an approaching trough in the annual rate of decline of output, confirming the message from real money trends – see here.
