Nearly all community bankers say U.S. is in recession

Nearly all community bankers believe that a recession has already started, according to the fourth quarter 2022 Community Bank Sentiment Index released by the Conference of State Bank Supervisors. 

The index, released Jan. 10, fell six points to 85 as community bankers continued expressing concerns over regulations, monetary policy, cyberattacks, and the broader economic outlook. Any reading below 100 indicates a negative sentiment. Ninety-six percent of community bankers said the U.S. economy is already in a recession.

 Bankers continue to lack confidence in the Federal Reserve’s approach to monetary policy. Expectations that the Fed will adversely impact market conditions fell two points to 33. The outlook for future business conditions fell five points to 37.  

The profitability component of the index had the sharpest quarterly decline, falling 22 points to 99. The index covering regulatory burdens remained the lowest among the seven components at 26 points, which was five points higher than the third quarter but still historically low.  

“The nation’s community bankers have a gloomy economic outlook and expect a tough year ahead,” said CSBS Chief Economist Tom Siems. “And because they have a good sense of consumer and business confidence at the local level, community bankers might be the best leading indicator for assessing future economic conditions.”