Data: Federal Reserve; Chart: Axios Visuals

U.S. banks are seeing deposits skyrocket and are pulling back on loans in the face of the coronavirus pandemic, newly released data from the Federal Reserve show.

Why it matters: It's the latest sign of trouble for the banking sector and the economy — a signal that consumers and businesses aren't starting new projects or focusing on growth, and are instead socking away cash.

By the numbers: The Fed's latest report on assets and liabilities of commercial banks shows that while banks have radically stepped up commercial and industrial loans, consumer loans have fallen precipitously.

  • Commercial and industrial loans rose year over year by 116.8% in March, 170.4% in April and 37.6% in May, in large part because businesses have been drawing on lines of credit.
  • Overall, consumer loans declined by 24.7% in May after a 41.7% decline in April.
  • Credit cards and other revolving plans saw 73.7% and 43.7% year-over-year declines in April and May.
  • Residential real estate loans and real estate loans overall also ticked down notably in May.

At the same time, deposits rose at a historic pace, adding to the $1.85 trillion of deposits reported by just the top 50 U.S. banks in the first quarter.

  • In April alone, deposits rose by $865 billion, more than the previous record for an entire year. In May, deposits gained again, rising by $604 billion.
  • After a brief decline during the week ended June 3, deposits again increased during the week ended June 10 by $85 billion.

Between the lines: It's more bad news for banks following a quarter in which profits fell 70%.

  • The FDIC noted in a recent report that “deteriorating economic activity” caused lenders to write off 15% more delinquent debt than the previous year and set aside $38.8 billion to cover potential loan losses, up nearly 280% from the prior year.
  • More than half of all banks reported a profit decline, and 7.3% of lenders were unprofitable in Q1. The amount of non-current loans rose 7.3% from the previous quarter, the biggest increase since 2010, according to the FDIC data.

The big picture: In addition to skittish consumers, banks have tightened their lending standards and are being "as conservative as possible, especially with people that aren't existing customers," Stephen Scouten, a bank analyst with Piper Sandler, said in an S&P Global Market Intelligence report last week.

  • "Bankers don't really have a clue yet what losses are going to look like."
  • "In terms of true new business, new customer production, they're going to be extremely cautious."

Go deeper: Marc Benioff and PayPal back payday loans alternative Even

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Aug 28, 2020 - Economy & Business

It's a great time to be a car dealer — but not so hot for buyers

Illustration: Eniola Odetunde/Axios

Anyone looking to buy a car right now is likely to find fewer choices and higher prices — with very little room to negotiate.

The big picture: The pandemic has thrown off the natural balance between supply and demand for new and used cars, driving up vehicle prices and putting all the bargaining power into the hands of car dealers, who are enjoying fatter-than-normal profits.

Hundreds gather to pay tribute to Justice Ruth Bader Ginsburg along Supreme Court steps

Photo: Alex Brandon/AP

At the Supreme Court steps Friday night hundreds of people gathered to pay tribute to Justice Ruth Bader Ginsburg — singing in a candlelight vigil, with some in tears.

Details: If there is a singular mood at the Supreme Court tonight, it’s some kind of a daze manifested by silence. 

A court fight for the ages

The flag flies at half-staff as people mourn on the Supreme Court steps last night. Photo: Tasos Katopodis/Getty Images

Ruth Bader Ginsburg — feminist icon, legal giant, toast of pop culture — left this statement with granddaughter Clara Spera as cancer closed in: "My most fervent wish is that I will not be replaced until a new president is installed."

The big picture: For all that the nation owes "Notorious RBG" — the hip-hop-inspired nickname she enjoyed and embraced — Republicans are planning to do their best to be sure her robe is quickly filled, despite that last wish, with her ideological polar opposite.