Dallas bank makes forecast for state’s growth

The market is closely watching the US PMI – a survey of purchasing managers that reveals their expectations for the near future.

The survey focuses on the real sector: industry and services. And does not look at the financial sector, which provided every tenth dollar of GDP in the first quarter.

But the Dallas Fed conducts a financial questionnaire for Texas (9% of US GDP), northern Louisiana and southern New Mexico. It provides an opportunity to look at the current state and, most importantly, the expectations of 66 banks and other financial institutions.

Among the individual comments from the survey that the Dallas bank highlighted, there is not a single positive one, here are some examples:

1. Operating expenses continue to rise, and demand for loans is expected to decline. We are concerned that the Fed will fail in its attempt to organize a soft landing.
2. Inflation drives all the talk and decisions. Lending decisions are being delayed and our loan portfolio has shrunk significantly.
3. Overall, the economy is moving in the WRONG direction. Inflation is too high, labor force participation is too low, wages are growing too fast, but still less than inflation.
4. We are preparing for a slowdown in lending as interest rates rise. We also expect commercial and residential property values ​​to decline due to slowing demand.

The results of the survey on the actual state of business are similarly alarming.

An important aspect is credit conditions. If they become more stringent, it is more difficult for businesses to take out loans, including to repay previous ones. This creates the risk of bankruptcy.

For example: 52% of respondents indicated an increase in lending over the past 6 weeks, 17% indicated a decrease. The rest – unchanged
Net index = 35%.

And the previous value was 47%.

The index of demand for loans is 22% (previously 39%).

The current index of credit conditions is 21%, that is, more than those financial institutions that complicate the conditions for obtaining a loan.

This is done by 23% of respondents, and only 2% simplify the conditions.