WASHINGTON–Lending activity in the U.S. picked up slightly toward the end of 2021, led by commercial real estate borrowers, according to the latest Beige Book report from the Federal Reserve.
The reports from the Federal Reserve districts further found that banking “remained steady,” noting “ongoing improvement in business conditions” in the finance sector.
The Beige Book has identified several areas of concern, including that a bubble was forming in home mortgages. But that concern is not considered major, with overall view expressed by the Fed being that home values were sufficient to allow most homeowners to sell their properties and pay off mortgages that had become unaffordable.
The Fed’s Beige Book, which is published eight times a year, summarizes comments received from outside the Federal Reserve System and is “not a reflection of the views of Fed officials.” The latest report covers the period ending Jan. 3.
Additional Data Points
Other points raised in the most recent Beige Book include:
- Direct auto lending was still being affected by a lack of car dealer inventory
- Increases in business loan refinancing were occurring
- Terms were being adjusted on borrowing (such as extending the duration on new lines of credit) amid subdued loan demand
- Competition for loans accelerated further, including that from fintech companies.
- Overall economic activity across the nation expanded at a modest pace. “Modest economic growth was constrained by ongoing supply chain disruptions and labor shortages,” the report states.
- Demand for materials and inputs, and demand for workers, remained elevated among businesses, the book reported.
- Although consumer spending continued to grow at a steady pace ahead of the rapid spread of the omicron COVID-19 variant, most district banks reported a sudden pull-back in leisure travel, hotel occupancy, and patronage at restaurants as the number of new cases rose in recent weeks.
Looking Forward
Looking forward, the Beige Book outlook for 2022 is optimistic, although several districts reported that business expectations for growth over the next several months “cooled somewhat during the last few weeks.”
The full report can be found here.