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Bank Lending Is Still Down. Should We Be Worried?


"...Finally, unlike the stock market or consumer confidence, bank lending is a lagging indicator. Businesses look for loans to expand once the economy is growing and orders are coming in again. And banks, since they get hurt so badly in recessions, particularly this one, become very risk-adverse at the beginning of economic cycles. "In the initial stages of a recovery banks are never handing out cash," says Lakshman Achuthan, who is a managing director at Economic Cycle Research Institute. "It never happens that way, and we have had plenty of recoveries.""
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