🔎The truth about the strong credit impulse.
Why are bank loans growing so much when the housing market is frozen, consumer confidence is poor and the labor market is not creating new jobs?
It might be one of the most confusing macro charts out there right now: Growth of loans and leases in bank credit:
In spite of continued restrictive monetary policy, bank lending is currently growing at an annual rate of 7.5%. It’s growing at the fastest rate in ten years (if we ignore pandemic borrowing volatility). It’s growing faster than on average over the last 50 years (6.8%). And the growth rate is even accelerating further.
This is happening while consumer sentiment is at record lows, while the US economy has barely created any new jobs in over a year and while the housing market is effectively frozen. What is going on? How is this possible?
