“Easier lending standards are usually associated with later employment growth,” said UBS economist Ethan Harris at a luncheon in December.In fact, easing lending standards is one of the most compelling leading indicators of job creation.
So, the results of the latest Federal Reserve Senior Loan Officer Opinion Survey seems to be sending a bullish sign for jobs. From today’s Fed report:
In the January survey, generally modest fractions of domestic banks reported having eased their standards across major loan categories over the past three months on net. Domestic respondents indicated that demand for business loans, prime residential mortgages, and auto loans had strengthened, on balance, while demand for other types of loans was about unchanged. U.S. branches and agencies of foreign banks, which mainly lend to businesses, reported little change in their lending standards, while demand for their loans was reportedly stronger on net.
From UBS’s Harris: