The Federal Reserve’s quarterly Senior Loan Officer Opinion Survey released Monday showed that banks tightened lending standards in the first quarter and plan to keep tightening. That’s an ominous sign for the economy, a top Wall Street strategist said.
“Tightening lending standards preceded by a Fed tightening cycle have a 100% hit rate in signaling recession ahead,” Michael Kantrowitz, chief investment strategist at Piper Sandler & Co., said in a note. In contrast, the last four so-called soft landings were preceded by easier lending standards . For households, banks reported tighter lending standards for all residential real-estate loans other than loans backed by government-sponsored enterprises, or GSEs.
Stocks were little changed after the release of the survey Monday afternoon. The Dow Jones Industrial Average DJIA was down 78 points, or 0.2%, while the S&P 500 SPX was virtually flat on the day.
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