Governor Gavin Newsom faces significant challenges in addressing the economic impact on latest updates from the weaker loan demand reported by the banks. This is a serious issue that has significant implications for California, its residents, and the state’s economy.
Economic Outlook
According to the Federal Reserve’s quarterly Senior Loan Officer Opinion Survey (SLOOS), there has been a noticeable decline in demand for significant business loans and consumer credit across the United States in the third quarter of 2024.
Specifically: The net share of banks seeing stronger demand for commercial and industrial loans from large and medium businesses fell to -21.3% from 0% in the previous quarter. Demand from small businesses decreased to -18.6% from 0%. Consumer credit card loan demand dropped to -2.1% from +2.0% in the second quarter. Auto loan demand declined to -12.8% from -10.4%.
The Impact on California
Labor Market and Employment: California’s labor market has been underperforming compared to the national average for over a year. The weaker loan demand could exacerbate this trend: