Loan Standards, Market Index & Fed Debt

This multilayered chart combines a number of key economic indicators:

  • Bank Loan Standards: The chart shows the net percentage of domestic banks tightening their loan standards for large, middle-market, and small firms. These measures indicate banks' credit policies, which often respond to economic conditions.

  • Wilshire 5000 Total Market Full Cap Index: This represents the overall performance of the U.S. stock market and serves as a pulse of investor sentiment.

  • Federal Funds Effective Rate: This rate, benchmarked to July 1954, shows the interest rate at which banks lend reserve balances to other banks on an overnight basis. Changes in this rate influence borrowing costs throughout the economy.

  • Federal Debt Held by Federal Reserve Banks: This depicts the amount of U.S. government debt held by the Federal Reserve, which can affect money supply and economic stability.

Together, these components paint a rich picture of the country's economic landscape, intertwining credit policies, market performance, interest rates, and federal debt.

Potential Interpretations:

  • Positive Scenario: If banks are easing loan standards, the Wilshire 5000 Index is trending upwards, the Federal Funds Rate is stable or moderately rising, and the Federal Debt held by the Fed is under control, this points towards a thriving economy with healthy credit conditions and investor confidence.

  • Negative Scenario: If banks are tightening loan standards, the Wilshire 5000 Index is falling, the Federal Funds Rate is excessively high or low, and Federal Debt is rapidly increasing, this suggests a challenging economic climate with tighter credit, investor wariness, potential monetary instability, and concerns about growing federal debt.

Last updated