U.S. Banks Report Weaker Loan Demand in Q3, Fed Survey Reveals

According to a survey released today by the Federal Reserve, U.S. banks experienced a decline in loan demand across various categories in the third quarter. The survey assessing loan demand indicated that, despite the Federal Reserve's recent moves to lower interest rates, no increase in loan demand was observed.

The Federal Reserve's quarterly Senior Loan Officer Opinion Survey (SLOOS) emphasized a decrease in the net share of banks reporting stronger demand for commercial and industrial loans from large and medium-sized business customers. This figure fell from zero in the second quarter to negative 21.3 percent. Similarly, demand from small businesses declined from zero to negative 18.6 percent.

A downward trend was also observed in consumer loans. The net share of banks observing stronger demand for credit card loans decreased from positive 2.0 percent in the previous quarter to negative 2.1 percent. Demand for auto loans weakened as well, with the net share dropping from negative 10.4 percent to negative 12.8 percent.

The data obtained from the survey provides a snapshot of the lending environment and suggests that businesses and consumers may be more cautious about borrowing under current economic conditions. As banks and financial institutions strive to adapt to the changing landscape, the complete effects of this shift in loan demand are yet to be seen.