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Fed Beige Book; Bankers On ‘Loan Diet’ As Credit Quality Expected To Drop

Federal Reserve Board released its October Beige Book report indicating banks expect little change loan demand for the near future. Photo Credit: Google Maps

Posted October 19, 2023

The Federal Reserve Board released its latest Beige Book report which shows Kansas City and the Tenth District are experiencing a “loan diet” as the bankers are still adjusting to real estate and industrial sectors.

The Beige Book—a report outlook that gathers anecdotal information from economists, market experts, and other sources—described Kansas City’s economic conditions beginning to soften.

Several bankers interviewed for the report characterized their appetite for lending as being on a loan diet as bankers continue to seek smaller balances and better creditworthiness, according to the report. As loan demand remained unchanged in the district, bankers expected more deterioration in consumer credit quality over the next six months.

The Tenth District’s employment levels were stable, but wage growth slowed, particularly among entry-level jobs. Additionally, prices continued to grow moderately, however, growth in housing rental rates slowed substantially.

View the Beige Book, here.