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  • welcome to charts that counts.

  • We often hear about the bike for Kate id US economy with an energized consumer and a more subdued corporate or industrial sector.

  • But sometimes that distinction is hard to see in the data outside of sentiment surveys, here is another way to look at it.

  • This is a chart of growth in loans on the balance sheet of U.

  • S.

  • Banks.

  • The chart shows two different kinds of loans.

  • The yellow line here represents unsecured consumer loans.

  • The Green Line, on the other hand, is loans to companies or commercial and industrial loans.

  • You'll notice a couple of things in this chart.

  • First, you do see the overall slowdown in the growth in the American economy, as reflected in declining loan demand right around the end of 2018 and into 2019.

  • But the two kinds of loans on banksbalance sheets reflect that slowdown in quite different ways.

  • In consumer loans or credit card loans, there's a noticeable decline.

  • But in 2019 the decline has stabilized at around 4% growth greater than the growth in the overall economy.

  • In fact, U S consumers are still confident enough to put dead on their credit card, and banks are confident off in those consumers toe.

  • Let them do that with corporate loans.

  • On the other hand, the decline has been Maur precipitous and deeper.

  • We see that now the rate of growth of loans to corporations on bank balance sheets in America is practically zero.

  • Now it may be that the lack of growth in banks corporate lending reflects more than just the economy it may be.

  • The companies are going other places to borrow money, such as the bond market, rather than going to banks.

  • It may also mean that banks are selling on some loans that they originate.

  • However, this trend is so dramatic that demand for loans four corporations has to be part of this story.

  • And here is a question.

  • In recent quarters, as this chart reflects, earnings growth at banks has been driven by consumer banking, which is still growing at that reasonable rate.

  • There has been no growth drink or less growth driven on the corporate side.

  • If banks are making up for the lack of corporate activity by extending risky loans to consumers, the fact is we may not find that out for a couple of years.

  • The economy is strong, unemployment is low.

  • And if consumers air taking risky loans, it's gonna take a while to figure that out.

  • Questions, Comments.

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welcome to charts that counts.

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