Commercial Bank Loans At Record-High
The chart above (click to enlarge) shows the series "Commercial and Industrial Loans of Weekly Reporting Large Commercial Banks" from 1988-2008, available from the Federal Reserve via FRED. A couple key points:
1. As of the first week of January, commercial bank loans are at a record high of $760 billion.
2. It was only three months ago, in early October 2007, that commercial bank loans surpassed the previous record high commercial loan volume of $722 billion set back in September 2000 (a banking milestone that went unreported).
3. Compared to many economic and banking variables that are reported only monthly or quarterly, often with long lags, commercial bank loans are reported weekly, with a lag of only a few weeks, and therefore provide important, current, and up-to-date information on commercial bank lending.
4. It's true that "commercial and industrial loans outstanding" are considered to be a lagging indicator by The Conference Board, but it's also true that commercial loans started declining at the onset of both of the last two recessions (see chart above).
Bottom Line: Given the continuing strength of commercial bank lending at record-high levels through early January, it's highly unlikely that the U.S. economy has entered into a recession. I'll continue to monitor this important economic variable.