The chart above shows delinquency rates for business and agricultural loans at all U.S. commercial banks from 1987:Q1 to 2008:Q3 using recently released

Federal Reserve banking data

through the third quarter. In both cases, delinquency rates for agricultural and business loans are close to all-time historical lows, and especially for business loans (1.61%) far below the 3.92% peak in the second quarter of 2002 following the last recession and far below the 6% peak during the 1990-1991 recession.

Although delinquency rates will likely rise in the fourth quarter, the low rates of delinquency for non-consumer loans (business and agricultural) through the third quarter 2008 show that we are nowhere close yet to the delinquency rates for business/ ag loans during the recessionary conditions of 1990-1991 or 2001. So before we start making comparisons to the Great Depression and the 1930s, maybe we should first be using the last two recessions as our benchmark comparisons.



Of course, as expected , the major weakness for bank loans is in the real estate sector, and delinquency rates for real estate loans through the third quarter reflect that weakness (see chart below). Real estate loan delinquencies are approaching 5%, which is higher than the 2001-2002 peak of 2.2%, but not yet as high as the 7.5% in 1991.

Likewise, the delinquency rate for consumer loans (see chart below) of 3.8% is below the 5% peak in 1991, and below the rates during the peak of the economic expansion of the 1990s.

