Almost everything related to business in America is either directly or indirectly financed by loans. This is why economists pay close attention to reports on consumer and industrial loans like the Federal Reserve's Senior Loan Officer Opinion Survey.
When commercial lending standards are easier, then you can probably expect business spending activity (that is, capital expenditures) to pick up. UBS's Maury Harris has noted that "easier lending standards are usually associated with later employment growth."
Here's what the Fed's new April 2014 survey revealed about lending standards and demand: ...Regarding loans to businesses, the April survey results generally indicated that, on balance, banks eased their lending policies for commercial and industrial (C&I) and commercial real estate (CRE) loans and experienced stronger demand for both types of loans over the past three months. The survey also contained special questions that asked banks about changes in their terms on CRE loans over the past year. Banks reported easing CRE loan terms, on net, over that period.
This is a bullish precursor to a pickup in capex, which Charles Schwab's Liz Ann Sonders characterized as a sign of "animal spirits" reviving.
"On balance, this report points to further re-leveraging in commercial and non-mortgage consumer debt, reinforcing the improving trend that has been seen in other credit-related reports," said TD Securities' Millan Mulraine. "[T]he buoyancy in C&I lending activity is especially important as we continue to see a pick-up in business capital investment as a necessary, though not sufficient, conditions for the economic recovery to sustain the higher level of growth momentum beyond Q2."
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