Consumer lending got a boost from lower interest rates, but business borrowing declined during the last six weeks amid concerns the economy was slowing, the Federal Reserve Board said Wednesday.
Banks in the New York, Boston, Chicago, Atlanta, Philadelphia, and San Francisco regions reported increases in consumer lending, the Fed said in its Beige Book, a periodic review of the country's economic health.
The San Francisco Fed, however, warned that economic uncertainty may slow consumer borrowing in coming months.
Business lending fell in the Cleveland and Richmond, Va., regions, the Fed said. Eight districts, including Kansas City and New York, reported that tougher credit standards were responsible for slowing commercial real estate activity and business lending.
Banks in Philadelphia, Cleveland, and San Francisco said they got new business from corporations that typically turn to the capital markets for credit.
In New York, commercial and industrial borrowers reported difficulty getting financing. Only 6% of banks surveyed in New York reported a higher willingness to lend, which the report says is the lowest percentage in at least four years.
Overall, the economy continued to grow during the last six weeks, though at a slower pace than earlier this year, the Fed said.
Real estate sales, construction, and manufacturing were all strong, said the central bank. Labor markets remained tight throughout the country, though demand for factory workers softened. Retail prices and wages were flat. Nearly every reserve bank said consumers and businesses were concerned about the economic outlook.
"We're moving from a period of pretty much across-the-board strength to a situation that is more mixed," said Frederick Breimyer, chief economist at State Street Corp. in Boston, who said he does not expect the Federal Open Market Committee to cut overnight rates when it meets Nov. 17.
"The news of the day isn't that bad," he said. "It's weakness against the backdrop of strength."
The policymaking committee last cut rates Oct. 15, when it shaved 25 basis points off the overnight federal funds rate and the discount rate. This was the second federal funds rate cut in as many weeks.