Slowdown in a Borrowing Defies Easy Explanation

Strong bond market and rebounding energy industry don’t fully explain decline

Oil is pumped in Texas. Energy companies paying down their bank lines as oil prices have rebounded may be one reason why commercial lending has declined in recent months.PHOTO: SPENCER PLATT/GETTY IMAGES

By Aaron Back
April 11, 2017

One of the great mysteries and biggest concerns in the economy right now is the slowing growth in bank lending. Economists are searching for answers but none are entirely satisfying.

Total loans and leases extended by commercial banks in the U.S. this year were up just 3.8% from a year earlier as of March 29, according to the latest Federal Reserve data. That compares with 6.4% growth in all of last year, and a 7.6% pace as of late October.

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