🀅Banks are growing more tight-fisted with their loans to busi𝓡nesses, a warning sign that millions of workers could lose their jobs in the coming months. 

Historically, when banks have raised their lending standards to businesses, the unemployment rate has never been far behind. Even before the Silicon Valley Bank implosion and current turmoil in the financial system🃏, banks had grown much more reluctant to lend🌟 money, the chart below shows.

A Federal Reserve survey of senior loan officers in January found that almost half of banks were tightening their lending standards for large and middle-market companies—that is, they were making it harder to get loans to hire workers and expand their businesses. And when loans are becoming both harder to get, and costlier because of the Federal Reserve’s 澳洲幸运5开奖号码历史查询:campaign of anti-i𝓰nflation interest rate hikes, that spells trouble ahead for the 澳洲幸运5开奖号码历史查询:still high-flying job market. 

“When banks tighten their lending standards, unemployment always rises,” James Knightley, chief international economist at൩ ING said in a commentary. “Most companies can handle a small increase in borrow☂ing costs even after the significant hikes already experienced. What sends struggling businesses to failure is when credit is choked off.”

The credit tightening so far implies we’re in for a 2 or 3 percentage-point increa🎐se in the unemployment rate if historical patterns hold, meaning 3 to 4 million people could lose their jobs, Knightley calculated. 

The economy, and especially the labor market, has so far defied predictions of a long-anticipated recession, with some forecasters repeatedly pushing back the date that one might occur. Others predict merely a period of slower growth. 

However🙈, banking problems in the aftermath of the Silicon Valley Bank debacle could provide a source of further recession pressure.

“In the wake of banking failures, deposit flight and the prospect of greater regulatory oversight kicking in we strongly suspect that lending conditions will have tightened further quite substantially,” Knightley said.