The U.S. may be seeing a 'compression' in credit rather than a crunch, economist says

the senior loan officer survey and what it tells us about the tighter credit conditions and if there are more regional lenders that are vulnerable and could fail. Yeah that was an interesting release. Now thankfully Chair Powell actually I think kind of spilled the beans a little bit told everybody what to expect in the senior loan officer survey because during the press conference he made a number of references to it saying that it did show that there was some tightening of lending standards. I think one of the bigger surprises was the notable decline in demand for lending so it's not just that banks are pulling back but even businesses and households seem to be pulling back. We would expect that with higher rates here but it was a little bit bigger of a drop than what I was expecting to see. So this really does suggest that maybe we're not seeing a credit crunch but it is more like a compression or some sort of consolidation in credit which is likely then to further weigh on growth and inflation going forward. And Brian what happens if you know we're if Treasurer Secretary Janet Yellen is to be believed as early or as soon as June 1st Washington is going to go broke.

You've got the president meeting with the Kevin McCarthy tonight trying to hash things out. I mean hopefully they'll get things something done raise the ceiling at the 11th hour last second. What do you think? Yeah we're not holding our breath right as to whether or not there's going to be some big break through this week. I think in a best case scenario that they would agree to disagree and just punt a decision a little bit further down the road effectively suspend it or agree to lift the debt ceiling a certain amount and then continue negotiations for another month or three months or so. You know and it is one of those weird things where everybody is taking a very hard line stance but we never really know what's going on behind the scenes right. It is the tone a little bit softer. So I think that it will be interesting to see what the press release if there's any sort of statement that comes out after their discussion if it sounds like they're making progress and they don't have to get to a solution.

They just have to I think hint at some progress for there to be some relief in the markets here.

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