Where to Look for Signs Financial Turmoil Is Impacting the US Economy

The key to if — or when — the US economy falls into recession will depend on how the latest turmoil in the banking sector spills over to Main Street.

Less lending and tighter loan standards would make it tougher for people to buy cars and homes, and harder for businesses to expand and invest. Elevated concerns about the banking system and heightened odds of a recession also risk turning households more cautious about spending and businesses wary of beefing up payrolls or pursuing capital investments.

The economy was already showing some cracks from the Federal Reserve’s steep interest-rate hikes to stave off inflation. The failure of three US banks followed by a crisis of confidence in Credit Suisse Group AG spooked investors on concerns about the stability of the financial sector.

With conditions changing by the hour, traditional economic data points — typically released monthly or quarterly with a lag — prove less helpful.

Following are some places to look to gauge the economic fallout from the tumult in the banking sector. It should be noted, though, that some of these indicators have already retreated in recent months which will make deciphering the impact even more challenging:

Bank Lending

Each Friday around 4:15 p.m. in Washington the Fed releases a slew of information on assets and liabilities at the nation’s commercial banks. Statistics on consumer, real estate and commercial loans are all included, as well as broken out into broader categories based on bank size.

The report, known as the H.8, will be closely watched by economists and investors for insight into lending patterns and deposits at both regional banks and the nation’s biggest banks.