Latest Beige Book report cites loan growth in most districts, strong deposit growth

The latest collection of feedback from the Federal Reserve’s 12 districts notes slight to moderate loan growth in most districts, not much change (overall) in credit standards, still-strong growth in deposits due to recent stimulus payments, and some concerns about future, potential impacts of rising interest rates and supply chain disruptions.

That feedback, presented in the Fed’s June 2 Beige Book based on information collected on or before May 25, also pointed to improving loan quality in the districts that offered such information.

The Fed’s Beige Book, published eight times a year, summarizes comments received from outside the Federal Reserve System and, the Fed notes, is not a reflection of the views of Fed officials.

The June 2 report includes information under the headings of banking, banking and finance, or financial services from 10 of the Fed’s 12 districts. The summary information shows lending up in most districts, with commercial lending growth the strongest but growth also noted for residential real estate lending, consumer credit card loans and auto loans.

The Philadelphia district was a bit of an outlier, according to the feedback provided: bank lending fell slightly during the period (though it rose modestly year over year for the period), with flat or declining growth in most types of lending for the period but some growth year over year.

More broadly, the report summarized generally positive feedback on the economy overall. It said several Fed districts cited positive effects of increased vaccination rates and relaxed social distancing measures, though they also noted the adverse impacts of supply chain disruptions. “The effects of expanded vaccination rates were perhaps most notable in consumer spending in which increases in leisure travel and restaurant spending augmented ongoing strength in other spending categories,” it states.

It also noted that light vehicle sales remained solid but were often constrained by tight inventories. There were similar challenges for construction. For example, it stated, homebuilders “often noted that strong demand, buoyed by low mortgage interest rates, outpaced their capacity to build, leading some to limit sales.”

The report said that overall, expectations changed little, “with contacts optimistic that economic growth will remain solid.”

Federal Reserve Beige Book – June 2, 2021