An Upsurge in Commercial Credit

The Federal Reserve decided yesterday not to take further action to try to jump-start the economy with further monetary stimulus. One reason for the lack of action - according to the Fed's Dallas governor, Robert McTeer - was the fact that bank credit has been growing recently, signaling that we could see further economic expansion in 2012. 

Commercial and industrial loans had dropped by 1.7 percent over the past four years, but they ballooned by nearly 10 percent in the third quarter of 2011. Overall, bank credit is growing at its fastest pace in three years. McTeer thinks that could mean growth in the fourth-quarter GDP figures that then continues on that path into next year. 

The largest beneficiary of this borrowing is likely to be the small-business community. Not as likely to benefit from the trend: The housing market. While commercial loans were growing. bank real estate loans actually dropped by 2.4 percent in the third quarter.