Large U.S. domestic banks at the start of September 2022 had $1.46 trillion* in commercial and industrial loans outstanding; representing an 18% increase from a year ago. This marks the fastest expansion in C&I loans from the large banks category since 2008.
It is difficult to argue that this will last long, however, given the efforts by the Federal Reserve to slow inflation by curtailing borrowed spending. As the Fed’s rate actions work their way through the economy borrowing costs will rise, lowering returns on invested capital. As a result, a rising number of planned investment projects will never see the light of day for lack of sufficient expected returns.
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