Economics
A Credit Crunch Is the Last Thing the Strained US Economy Needs
A pullback in bank lending, on top of the Fed’s rate hikes, could hasten a recession.
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The biggest banking scare since the 2008 financial crisis will ricochet through the economy for months as households and businesses find it harder to gain access to credit.
That’s the scenario facing the US after the collapse of three regional lenders, and a giant global one, over an 11-day span, according to several economists. Federal Reserve Bank of Minneapolis President Neel Kashkari, in a March 26 interview on CBS’s Face the Nation, said the turmoil “definitely brings us closer” to a recession and noted that officials are closely watching for signs of a widespread credit crunch.