Loan Demand Is Holding Up, Fed Survey Finds

Despite signs of slower economic growth, loan demand has remained healthy, the Federal Reserve Board reported Wednesday.

While all lending was strong during December, commercial finance outpaced consumer borrowing, according to the Beige Book, the Fed's periodic summary of economic conditions around the country.

Signs of an economic slowdown, such as slower single-family home sales, do not pose a problem for banks, said James A. Chessen, chief economist at the American Bankers Association.

"Auto loans are down, and housing's still waiting for the sun to melt the snow, but loan demand for consumers and businesses has been strong for the last 18 months, and there doesn't seem to be any easing of that," Mr. Chessen said.

Business loan demand was reported to be especially strong in five of the 12 Fed districts, and was weaker only in the Richmond, Va., area. Consumer loan demand was weaker in the Atlanta and New York districts, but increased in four other districts.

The Federal Open Market Committee will use the Beige Book at its Jan. 30-31 meeting to set monetary policy.

The report, spanning early December through early January, is one of the few tools available for judging the economy, said James Annable, chief economist at First Chicago NBD Corp. That's because many of the economic reports produced by the Commerce and Labor departments were delayed by the federal government's monthlong partial shutdown.

Mr. Duchemin writes for the Medill News Service.

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