►Bank Loans: Still Contracting
Information from various sources suggests that the number of loans that banks are making to businesses continues to fall. The contraction appears to be driven by both supply and demand; banks are extending less credit, and businesses are asking for less. The restriction of credit may be one important factor that is constraining the current recovery, since businesses, especially small ones, rely on bank loans and access to credit to finance their operations, capital expenditures, and growth.
►In a sluggish economic summer, no easy fix ahead
“You can’t force people to take out a loan or spend money that they don’t want to spend,” says Alice Rivlin, who served as the Fed’s No. 2 official in the late 1990s.