The Recession is Over. So Why is Lending Down?

Fed Chairman Ben Bernanke says the recession is over. Hip-hip hooray, I guess. If we go by GDP, he's probably right. Just about every economist in the country expects third-quarter growth to be positive, which technically means the recession is over. But with unemployment expected to continue growing and the job market scraping the ocean floor in just about every category, it's hard to muster much joy about domestic product numbers. And then there's this: Bank lending is down for the sixth straight month.

How is that possible?

Here's the graph of average loan balance over the past six months from Zero Hedge.

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Here's "Tyler Durden" from Zero Hedge:

It was just yesterday that Tim Geithner was lying that banks are constantly increasing lending to consumers. Well, yet another lie refuted. Banks, and not just any banks, but those receiving government bail outs and subsidies, continued constricting lending in July...

Tyler thinks Treasury is trying to conceal these figures, but the Treasury Dept. itself issued a report this week saying precisely that banks getting help cut lending by 10 percent from June to July. Why? Treasury faults slumping demand for loans across most categories. Loans

...by all respondents rose in 1 category (other consumer lending products), fell in 6 loan categories (mortgages, home equity lines of credit (HELOCs) commercial and industrial (C&I) new commitments, and commercial real estate (CRE) renewals and new commitments), and were flat in 1 category (C&I renewals).

That's certainly bad news, and I'm not sure how it's possible to beam about a recovery that comes with not merely slumping but falling demand for loans. But such is the recovery we're in.