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Similar Numbers…Different Stories: Impact on Business lending

Jeff Thredgold is an interesting and entertaining economist. He writes a newsletter, Tea Leaf, Your Guide to Understanding Today’s Economy.
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In his recent post on ‘Similar Numbers…Different Stories’ he brings us up to date with a ray of hope. Read the article here.

Two bullet points I pulled out:

• Companies slashed capital spending at a 38% annual rate during the first quarter, with investment in software and equipment down at a 34% annual rate. Business investment in new buildings was down at a 44% annual rate. Weak business investment pulled GDP down 2.6% from the prior quarter

Does that mean there is less demand for business loans from our healthiest businesses?

• Businesses also slashed the level of inventories of goods by $104 billion during the first quarter, the largest quarterly decline on record. This factor alone subtracted 2.8% from first quarter GDP. The sharp reduction of goods “on the shelves and in the storerooms” suggests that manufacturing output will be ramped up faster than previously thought when overall spending by consumers and businesses strengthens

Does that mean when the confidence picks up, business borrowing will pick up faster than we thought?

What do you think?

About the Author
Linda Keith CPA is an expert in credit risk readiness and credit analysis. She trains banks and credit unions throughout the United States, both in-house and in open-enrollment sessions, on Tax Return and Financial Statement Analysis. She is in the trenches with lenders, analysts and underwriters helping them say "yes" to good loans. Creator of the Tax Return Analysis Virtual Classroom at www.LendersOnlineTraining.com, she speaks at banking associations on risk management, lending and director finance topics.