U.S. Banks Confront Unrelenting Deposit Erosion \ stacker news ~econ

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U.S. Banks Confront Unrelenting Deposit Erosion

1735 sats \ 16 comments \ @TomK 29 Dec 2023 econ

The latest FDIC data exposes a protracted challenge for U.S. banks as they grapple with a persistent decline in deposits spanning six consecutive quarters. Despite a moderated pace since Q1 2023, where an alarming $500 billion exited the banking system, the subsequent two quarters have seen a withdrawal of approximately $190 billion.

This nuanced analysis delves into the repercussions of a cumulative net loss of $1.1 trillion in deposits since the onset of 2022, urging a recalibration of financial strategies in response to this enduring economic phenomenon.

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234 sats \ 2 replies \ @Undisciplined 29 Dec 2023

If only people were also "depositing" those funds into Bitcoin. I'm pretty sure most of it is just being eaten up by inflated household budgets.

479 sats \ 1 reply \ @TomK OP 29 Dec 2023

I think the majority is fu..ed by inflation. What did I read this morning? 62% of households live payckeck to paycheck.

219 sats \ 0 replies \ @Undisciplined 29 Dec 2023

I would have expected that to be higher, honestly. People in the developed world were understandably not prepared for several years of 7%+ price inflation.

164 sats \ 3 replies \ @siggy47 29 Dec 2023

Was there supposed to be a link attached?

617 sats \ 2 replies \ @TomK OP 29 Dec 2023

Here You can follow it ''live'': https://ycharts.com/indicators/us_commercial_banks_deposits#:~:text=US%20Commercial%20Banks%20Deposits%20is,2.70%25%20from%20one%20year%20ago.

58 sats \ 1 reply \ @siggy47 29 Dec 2023

Thanks. Pretty grim. If you listen to U.S. MSM financial news (CNBC) happy days are here again.

352 sats \ 0 replies \ @TomK OP 29 Dec 2023

Yes indeed. Europeans avoid any contact with reality, too. But that's OK. Commilandia is here to save the day

10 sats \ 5 replies \ @halleck 29 Dec 2023

Could this be explained as a reversion to a "natural" trend line as COVID stimulus is leaving savings? I followed the link you posted in other comments, and it doesn't have a lot of history.

110 sats \ 4 replies \ @TomK OP 29 Dec 2023

The fall on Q1 happened during the bank runs and the bankruptcies of SVB and the others. The general negative trend could be the result of what You explained (and inflation). But to me it seems as if trust has been lost. Flight to save haven assets for sure drives it, too.

0 sats \ 3 replies \ @halleck 29 Dec 2023

I do agree that among us that watch financial news, there is a reduction in trust. Bank runs and collapses are a big deal. I think we should continue to watch with a cautious eye to see if deposits catch a trend line (something like steady inflation) and start nominal growth again sometime in '24.

10 sats \ 2 replies \ @TomK OP 29 Dec 2023

To be honest I give inflation a good chance to roar back in the 2nd half of '24 due to energy. Looks like we are following the 70's path closely.

https://m.stacker.news/9929

10 sats \ 1 reply \ @halleck 29 Dec 2023

I agree. I expect inflation to come back. A combination of supply chain shocks and loosened monetary policy should see that graph bounce. Energy is always hard to predict because of the entities that control oil supply.

0 sats \ 0 replies \ @TomK OP 29 Dec 2023

Aaaand: watch how the EU finance ministers killed the rest of the Maastricht rules last week. They need to fill the fast growing fiscal gaps.

10 sats \ 2 replies \ @BlokchainB 29 Dec 2023

Scary to see with a fractional reserve banking system.

But isn’t most of these “missing” deposits making it to money market funds? Rates started to rise right when these deposits started to disappear right?

150 sats \ 1 reply \ @TomK OP 29 Dec 2023

Correct. A lot went into MMFs. But this money was attracted by yields moving higher due to the sell-off before.

50 sats \ 0 replies \ @niftynei 29 Dec 2023

Money moving from bank deposit accounts into MMFs seems extremely logical given the interest rate diffs.

I’d also heard that crypto earn accounts were causing big drawdowns in deposits last cycle. No one wants to let their money sit at 0%