The Squeeze on Credit: How It's Stifling Growth and Loan Approvals
Banks in the US have continued to tighten lending standards for business loans and consumer loans, citing a less favorable economic outlook, reduced risk tolerance, and concerns about funding costs. Demand for loans has weakened, and economists warn that the tightening of credit conditions could choke off GDP growth and potentially lead to a recession next year. The Federal Reserve has also acknowledged that tighter financial and credit conditions are likely to weigh on economic activity.
