Following the mass withdrawals from small banks in the spring of 2023, the future of smaller financial institutions was unclear. To help you understand what is going on in the sector and what we expect to happen in the future, our highly-experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest...
Deposit outflows from small and midsize banks have stabilized. Depositors seem less concerned with losing uninsured money now that the FDIC (Federal Deposit Insurance Corp) has stepped in to insure all deposits at two banks: Silicon Valley Bank and First Republic Bank. Instead, depositors want higher returns.
Via money market accounts and other fixed-income instruments, savers have access to beefy and low-risk rates of return well above the yield on bank-held deposits. Note that banks are seeking fewer cash infusions from the Federal Reserve. Borrowing from the central bank’s emergency facilities has stabilized recently, while short-term borrowing from the Fed has returned closer to normal levels.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Still, there are many signs of rising anxiety about banking conditions among lenders. Recent surveys of senior loan officers show a sharp tightening of lending terms. The expectation of a slower economy and labor market has forced lenders to set aside funds for potential loan losses. Lenders will also pull back from riskier products and markets, restricting consumer credit.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
Read more
-
Start-ups Trying to (Profitably) Solve the World’s Hardest ProblemsThe Letter More investors are interested in companies working on breakthrough science to tackle huge societal challenges. The field of deep tech has major tailwinds, too.
-
Will lower mortgage rates bring relief to the housing market?The Kiplinger Letter As mortgage rates slowly come down here's what to expect in the housing market over the next year or so.
-
The Big Questions for AR’s FutureThe Letter As Meta shows off a flashy AR prototype, Microsoft quietly stops supporting its own AR headset. The two companies highlight the promise and peril of AR.
-
China's Economy Faces Darkening OutlookThe Letter What the slowdown in China means for U.S. businesses.
-
Should We Worry About the Slowing U.S. EconomyThe Letter With the labor market cooling off and financial markets turning jittery, just how healthy is the economy right now?
-
Kiplinger Special: How Businesses Should Budget for 2025Kiplinger Forecasts From fuel to AI software subscriptions, here's what you can expect to pay next year.
-
Intel Braces for an Even Tougher Road AheadThe Kiplinger Letter Amid a long, costly turnaround, Intel resets expectations again. Its new woes raise questions about U.S. industrial policy and global chip competition.
-
Car Prices Are Finally Coming DownThe Kiplinger Letter For the first time in years, it may be possible to snag a good deal on a new car.
