The latest Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve Board mostly finds that conditions have not changed since the last survey, which was conducted in July. For instance, 86.3 percent of senior loan officers say that lending standards for large and middle-market firms (e.g., those with annual sales of $50 million or more) were unchanged, with 89.6 percent saying that there were no changes in standards to small firms.
Yet, aside from those numbers, this survey does point to much weaker demand for loans overall. For large and middle-market firms, 31.4 percent of loan officers said that lending demand was either moderately or substantially weaker than from the previous quarter. That percentage was 27.1 percent for small firms. This is a reversal from July, which found that lending demand was starting to turn around. In the previous survey, for instance, the net demand was positive; it has now shifted to becoming a net negative.
This is mostly a reflection of the weaker economy, since as noted earlier, lending standards were mostly unchanged. (For large and medium-sized firms, 9.8 percent reported eased lending standards, which contrasts with the 3.9 percent who noted tighter standards.) Of those firms which tightened standards, the majority of them said that an uncertain economic outlook was the primary reason.
Chad Moutray is chief economist, National Association of Manufacturers.