A Dallas Fed survey of banks offers evidence that a feared 'credit crunch' is already under way, says Apollo Global chief economist Torsten Slok.
A trio of bank collapses last month put some economists and investors on the alert for a full-fledged “credit crunch” — a sudden and sharp slowdown in lending —capable of pushing the U.S. economy into recession.
The squeeze is already being felt, according to Torsten Slok, chief economist at Apollo Global Management. He penned a Thursday note, titled, “The credit crunch has started.” “The macro impact of the failures of Silicon Valley Bank, Signature Bank and Credit Suisse plus the downgrades of several regional banks has resulted in a crisis of confidence in our banking system,” one survey respondent said, according to the Dallas Fed.
“Most important, the costs of capital have increased, and underwriting standards have tightened,” Slok said in a March 21 note. The S&P 500 SPX was on track for a 0.2% fall in a holiday-shortened week. U.S. stock exchanges will be closed on Good Friday. The Dow Jones Industrial Average DJIA was up 0.6% for the week, while the Nasdaq Composite COMP was headed for a 1.1% decline.
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