It’s hard to find, because companies are shelving their purchasing plans like never before.

Source: NFIB “Are you planning capital expeditures over the next 6 months?”

The chart above shows the moving 12 month average, which will likely continue to move lower. In fact the current value at 21 is much lower than the previous low reading of 25 during the 2001 recession or the 26 reached at the bottom of the 1990 recession.

In a recent Federal Reserve Senior Lending survey small banks were asked why demand for loans have dropped off. The biggest reason cited by 60% of small banks was: Customer investment in plant and equipment has decreased”  

Next the survey asked if banks were tightening their lending standards, the answer was overwhelming:

Source: Fed’s Senior Officer Loan Survey

So even if businesses do want a loan for capital investment, they might not be able to get one. 

Banks were then asked “Why are they tightening?”  Again the answer wasn’t even close, the overwhelming reason is the economy. Companies are going through a rough patch and see more tough times ahead.

In our weekly “Ask the Economist” feature, our resident Economist, Mike Donnelly, will be tackling your questions about the economy. If you’ve got a question — and no topic is too big or small — you’d like him to field, e-mail us at economist@pbp.com or leave your queries in the comments section.

Tags: Lending standards, Purchasing plans, Recession