Bank Credit Contraction Signals Growing Recession Fears
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Bank credit levels have fallen for 3 straight quarters, the first sustained contraction since the Great Recession. This signals businesses are borrowing less.
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High interest rates make it more expensive for companies to take out loans. Less borrowing means less spending on growth projects.
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Some Wall Street experts predict a recession in 2023 despite economic resilience in 2022. Jeffrey Gundlach sees a 75% chance of a recession this year.
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Top economists like David Rosenberg and Steve Hanke also expect a sharp economic downturn, believing the Fed's rate hikes haven't fully impacted the economy yet.
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Contracting bank credit adds credibility to warnings of a potential recession. When companies borrow less, it can drag on economic growth.