At $7.1 trillion for the last week of July, bank loans to consumers and businesses hit their highest point since October 2008, Bloomberg reports.
The loosening in credit is thanks largely to consumers reducing their debt since the financial crisis and banks increasing their liquidity and capital ratios.
The news also comes amidst 8.3 percent national unemployment, a slowing economic engine, and a Fed reluctant to take direct action.
As Bloomberg reports:
The increase in lending may prevent the economy from slowing further after growth cooled to a 1.5 percent annual pace of growth in the second quarter. While the Fed last week moved closer to expanding its record stimulus, the figures on credit indicate that 43 months of near-zero interest rates may finally be giving the economy the jolt it needs, said Jim Paulsen, who helps oversee $320 billion as chief investment strategist at Wells Capital Management in Minneapolis.
“Many pieces of the credit-creation process are starting to work again,” Paulsen said. “Banks are lending, people are borrowing, housing prices are going up and a sense of normality is returning.”