Chart of the Week
The National Federation of Independent Business (NFIB) conducts a monthly survey to gauge small business optimism in the US. The questions address topics such as sales levels, headcount, difficulties filling job openings and ease of access to credit.
Businesses that are too small to issue bonds rely heavily on bank credit. Even before Silicon Valley Bank (SVB) and Signature Bank collapsed, credit conditions were tightening, with quarterly small business lending data revealing credit tightening only ever seen during recessions since the survey began in 1990.
In parallel, the ‘Expected Credit Conditions’ component of the NFIB survey deteriorated significantly in March.
The SVB and Signature bankruptcies are likely to have heavily influenced the survey responses gathered in March. While this influence will fade in the months ahead, credit scarcity was already on the rise and experience tells us that the full extent of banking crises only becomes clear in hindsight.
The opinion expressed above is dated April 14, 2023 and is subject to change.
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