(1) Total bank credit is contracting again.
(2) Commercial and industrial loans (business) as a percentage of total bank credit, a measure of productive investment in the US, continues to fall. It has fallen from 15.5% in 2009 to 13.5% in 2010.
(3) Real estate loans (which includes home equity loans) and real estate as a percentage of total bank credit continues to fall.
(4) Consumer credit and credit card loans continue to expand since February. Not only are consumer credit and credit card loans expanding but also increasing relative to total bank credit. Consumer and credit card loans as a percentage of total bank credit were roughly 9% and 4% in 2009, respectively. These percentages have grown to 12.7% and 7% in 2010. Consumption driven growth at the expense of investment reveals the inherent weakness of this recovery.
Break down of Commercial Bank Credit:
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