A credit crunch could worsen U.S. economic conditions, weighing on the stock market, according to financial experts.
The Federal Reserve warned in two publications—the Financial Stability Report and the Senior Loan Officer Opinion Survey on Bank Lending Practices—that a credit crunch is forming in the national economy as financial institutions tighten credit terms and consumer and business loan demand weakens. In addition, banking system stress, real estate pressures, and sticky and stubborn inflation are leaving the nation’s economic and financial health vulnerable.
Despite these concerns, the overall banking system “remained resilient,” the Fed reassured.
But this does not mean a recession can be ruled out….