More Signs of Belt-Tightening and a Slowing Economy: The Kiplinger Letter
Although fewer banks are tightening lending standards, more businesses and households are feeling the squeeze.
To help you understand what is going on in business and consumer banking, and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…
Lending standards are still tightening but at a smaller share of banks. A recent survey of senior loan officers shows further tightening for businesses and households in the third quarter, but by fewer banks than in the second quarter. In Q3 the trend was reported by 35% of banks, compared with more than half in Q2.
Commercial real estate also continues to see tougher standards. Two-thirds of banks had stricter loan standards in Q3 for construction and land development, nonfarm nonresidential and multifamily residential properties. Meanwhile, many commercial and industrial loans have requirements that are more stringent for large and small businesses. About one-third of banks had tougher loan standards in Q3.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
On the consumer front, fewer banks are raising standards for credit cards, auto and other consumer loans, though lending conditions remain historically tough. Consumers are relying more on credit cards for purchases. This is despite the higher interest rates seen on credit card balances. Data from the Federal Reserve show that consumers’ credit card spending and debt levels were still on the rise in the third quarter. Total household balances rose 1.3% from the previous quarter.
Credit card debt increased 4.7% during the period and 16.6% from a year ago, meaning Americans now owe $1.08 trillion on their credit cards. Look for delinquency rates on credit cards and auto loans to keep rising this year amid high card interest rates, high inflation and the slowing economy.
Also, note how much the average APR for credit cards has risen since late 2021. Borrowers now see an average rate topping 20%, the highest since the mid-1990s.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
Related Content
-
How to Plan a (Successful) Family ReunionFrom shaping the guest list to building the budget, here's how to design a successful and memorable family reunion.
-
These Unloved Energy Stocks Are a BargainCleaned-up balance sheets and generous dividends make these dirt-cheap energy shares worth a look.
-
You've Heard It Before, But This Investment Advice Still Pays Off"Time in the market beats timing the market" ¬— been there, done that, right? But don't write off the underlying advice. There's a reason it's a popular saying.
-
Congress Set for Busy WinterThe Kiplinger Letter The Letter editors review the bills Congress will decide on this year. The government funding bill is paramount, but other issues vie for lawmakers’ attention.
-
The December CPI Report Is Out. Here's What It Means for the Fed's Next MoveThe December CPI report came in lighter than expected, but housing costs remain an overhang.
-
How Worried Should Investors Be About a Jerome Powell Investigation?The Justice Department served subpoenas on the Fed about a project to remodel the central bank's historic buildings.
-
The December Jobs Report Is Out. Here's What It Means for the Next Fed MeetingThe December jobs report signaled a sluggish labor market, but it's not weak enough for the Fed to cut rates later this month.
-
The Kiplinger Letter's 10 Forecasts for 2026The Kiplinger Letter Here are some of the biggest events and trends in economics, politics and tech that will shape the new year.
-
Special Report: The Future of American PoliticsThe Kiplinger Letter The Political Trends and Challenges that Will Define the Next Decade
-
The November CPI Report Is Out. Here's What It Means for Rising PricesThe November CPI report came in lighter than expected, but the delayed data give an incomplete picture of inflation, say economists.
-
The Delayed November Jobs Report Is Out. Here's What It Means for the Fed and Rate CutsThe November jobs report came in higher than expected, although it still shows plenty of signs of weakness in the labor market.
