Economic Recession in 2017?

Really, An Economic Recession in 2017

Will we have an economic recession in 2017?  As the stock market continues to grind higher and investors become more complacent we turn our attention to one data point that has remained a “stubbornly fail-safe marker” of economic contraction since 1960.

Commercial & Industrial Loans

Every time Commercial & Industrial (C&I) loan balances have declined or stagnateda recession was already in progress or was imminent.  This can be seen in the following graphic, from Zero Hedge using Federal Reserve data.

 

 

On a year-over-year basis, after growing at a 7% year over year pace at the beginning of 2017, the latest bank loan update from the Fed showed that the annual rate of increase in C&I loans is down to just 1.6%–its lowest since 2011. 

Should the rate of loan growth deceleration persist, in roughly four to six weeks the U.S. would post its first year-over-year loan contraction since the financial crisis.  The graphic below illustrates how steep the decline has been.

 

 

Question: What do you believe is on the horizon for our economy? A Recession or continued growth? 

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