If optimism is growing around the economy, banks haven’t gotten the memo, based on the Federal Reserve's Senior Loan Officer Opinion Survey findings.

Most banks toughened up their lending standards in the second quarter and plan to continue doing so soon out of concern for the economic outlook, making it harder for businesses and individuals t🦩o take out loans.

The Senior Loan Officer Opinion Survey (SLOOS), released Monday, showed a growing number of banks tightened lending standards on credit, including business loans, mortgages, car loans, and commercial real estate loans in the second quarter of 2023. Banks saw falling demand for all kinds of loans to businesses and households other than credit cards.

Auto loan borrowers, for instance, faced high♔er minimum credit scores and higher monthly payments, while businesses got smaller lines of credit and higher borrowing costs on commercial and industrial loans. 

The survey, which polls senior loan officers at up to 80 large U.S. domestic banks about their lending practices, showed banks are growing more cautious about lending in an economy that continues to 澳洲幸运5官方开奖结果体彩网:send mixed signals about whether it will sink into a recession within the next year. While economists and 澳洲幸运5官方开奖结果体彩网:consumers alike have grown more hopeful that the Federal Reserve’s campaign of 澳洲幸运5官方开奖结果体彩网:anti-inflation interest rate hikes will end in a 澳洲幸运5官方开奖结果体彩网:soft landing rat🌜her than an economic crash, ✨banks aren’t taking any chances.

Pessimism by banks can be something of a self-fulfilling prophecy: Officials at the Federal Reserve have noted that tightening credit standards tend to slow economic activity and have 澳洲幸运5官方开奖结果体彩网:especially dragged on the economy since a string of highly publicized bank failures this spring. 

"With banks remaining risk averse in their lending and business and households reluctant to borrow, the risk is that credit contracts in coming quarters," James Knightley, chief international economist at ING, wrote in a commentary. "Given the importance of credit flow to the US economy, this means we cannot dismiss the possibility of a US recession despite the market’s relaxed mindset right now."