Commercial and Industrial Loans

Are we in a recession?

Commercial and Industrial (C&I) loans are types of loans primarily given to businesses rather than individuals. These loans are typically used by companies to finance their day-to-day operations or to fund capital expenditures.

This is simplistic, but when businesses are optimistic about the future, they’ll take out loans to finance growth. When they’re pessimistic, they’ll pull back and borrow less.

This chart shows the year-over-year change in C&I loans going all the way back to the late 1940’s. When the year over year change is positive (i.e. over the horizontal black zero line) loans are expanding. When the change is negative, businesses are pulling back. Recessions are shown in grey.

What’s notable is that there has never been a period of year over year contracting C&I loans without a corresponding recession. Never. Going back to the late 1940’s. Sometimes there’s a lag because recessions are almost never figured out until after the fact. And sometimes there’s been a recession without a corresponding contraction in C&I loans.

But I wouldn’t be surprised to find out (sometime in the near future) that we either are or have been in an economic recession.