A measure of US bank lending is showing signs of stalling, suggesting the American economy could face headwinds in 2020.
US commercial and industrial lending fell by $9 billion last month to $2.35 trillion, the biggest drop since March 2017, according to Federal Reserve Bank of St. Louis data. The total amount of C&I loans declined to levels last seen in May.
The drop could be a sign the US industrial economy is slowing. Manufacturing activity fell to 47.2% last month, compared with 48.1% in November, according to the Institute for Supply Management’s survey. The decline marked the fifth-straight month of PMI contraction amid softness in exports and new orders.
“Global trade remains the most significant cross-industry issue,” Timothy Fiore, chair of the ISM manufacturing business survey committe, said in a statement last month. However, he noted that several industries could see improvement because of the phase-one trade agreement between the US and China.
As trade tensions ripple through the bank loan market, consumer spending could still be a bright spot for American lenders, according to the Financial Times (paywall), citing Capital One $COF’s CEO, who recently said he is still “very bullish” about racking up new credit card customers. The McLean, Virginia-based bank’s executive also said loan delinquencies are “strong and stable.”
