Bank Lending Rises
The Wall Street Journal reports:
Some big U.S. banks are starting to increase their lending to businesses as demand for loans rises and healthier banks seek to grab customers from weaker rivals.
After declining steadily for most of the past two years, the amount of commercial and industrial loans held by commercial banks inched upward during the past two months, according to the Federal Reserve.
Moody's Analytics estimates that commercial and industrial lending in the fourth quarter has grown 0.2% from the third quarter, to $1.22 trillion, the first quarterly increase in two years. Moody's predicts such lending will rise 3% next year.
An uptick in business lending is an optimistic sign for the economy and can help to make the recovery self-sustaining. Such loans likely will be used by businesses to expand their operations, which could lead to new jobs and eventually to increased borrowing and spending by hired workers.
Until recently, a chronic lack of lending to businesses was seen by economists as one of the obstacles to healthy recovery. Commercial and industrial lending "is the last thing that turns in a business cycle," said Mark Zandi, chief economist of Moody's Analytics.
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