Loan demand surges as gov't spending slows under debt limit

In the last two weeks of 2012, total loans and leases at commercial banks in the US surged by $82 bln. That was sharpest two week increase in four years. What is happening here? One likely explanation is that vendors and other recipients of government payments may be getting bank loans to cover day-to-day operating expenses as government payments slow to a crawl under the debt ceiling. This is resulting in a temporary surge in bank credit as seen here and it could, potentially, dampen some of the negative impact of the current fiscal stalemate. However, you see how government "saving" is now just translating into non-government dissaving (debt growth). Too bad the clowns in Washington don't understand this.

Loans decline for the third consecutive week. A sign of a slowing economy?

Total loans and leases at commercial banks in the U.S. fell $23 bln in the last three weeks. Data from the Fed shows loans shrunk to $6.991 trillion in the week ending Mar 21, from $7.013 trillion on Feb 29. This is the first 3-week sequential decline since early Jan. Could be pointing to a slowing economy.

Private credit growth will be crucial if the economy is to withstand ongoing cuts in government spending. Data from the Treasury department shows that total Federal spending is down $458 bln versus last year.