Deposits pick up in latest week
The numbers: Commercial and industrial loans — a key economic driver — fell by $2.4 billion, dropping to $2.76 trillion, in the week ending Aug. 23, the Federal Reserve said Friday.
C&I loans hit a peak of $2.82 trillion in mid-March, right before the collapse of Silicon Valley Bank.
Key details: Lending by large banks fell $2.7 billion, to $1.54 trillion, in the latest week.
Lending by small banks rose $700 million, to $718.4 billion. Lending by small banks has picked up in recent weeks.
Total bank deposits rose by $45.4 billion, to $17.3 trillion, in the same week. But the gain still leaves deposits below their level at the start of August. Deposits peaked at $18.2 billion in mid-April 2022 as the Fed began to raise interest rates.
Big picture: Commercial and industrial lending fell for four straight months through July. On top of that, banks are raising loan standards and conditions, which is tightening financial conditions for the economy. Fed officials welcome the slower economy but don’t want to see a “credit crunch” that could slow the economy sharply.
Market reaction: U.S. stocks finished mostly higher on Friday after the jobs report showed labor markets continuing to cool off in August. The yield on the 10-year Treasury note finished the week at 4.18%, down 7 basis points for the week.