Nobody borrows billions of dollars just to sit still...
For the past few years, one missing puzzle piece has kept our market outlook mixed.
We were cautious as banks tightened lending standards back in 2023. At the same time, the market kept climbing... raising valuations and sentiment.
Those headwinds have eased in recent months. Valuations and sentiment have cooled.
That's partly thanks to strong earnings growth and partly because of volatility from America's war with Iran.
But while banks were more willing to lend, companies weren't borrowing...
Commercial and industrial (C&I) lending wasn't showing much momentum...
That's important because C&I loans fuel corporate growth. They finance day-to-day operations and expansion projects – like today's manufacturing plants and data centers.
C&I loans are also known as a "leading indicator." When they rise, banks are willing to lend and businesses are eager to borrow. That combination means credit is flowing into the economy.
In other words, today's higher borrowing leads to tomorrow's higher earnings.
When C&I lending stalls, it sends the opposite message... Companies may still be profitable, but they're saving cash rather than investing in growth.
That lag was one of the biggest reasons we were cautious earlier in this cycle...
Before the pandemic, C&I loans peaked at roughly $2.4 trillion. Lending briefly spiked above $3 trillion in 2020. But totals quickly pulled back to roughly $2.8 trillion for much of 2023 and 2024.
Then, after the 2024 presidential election, loan totals dipped. While it wasn't a disaster, it showed corporate America was still hesitant.
That brings us to today.
C&I lending has started climbing again despite tariffs and geopolitical volatility...
As of April, loan totals are nearing $2.9 trillion – the highest level outside the pandemic spike.
And unlike 2020, this isn't emergency borrowing. It's borrowing to expand. And it's sustainable.
Businesses are investing in the projects we've talked about for months. Take a look...
This is the spending signal we've been waiting for since 2023. Companies are borrowing today because they expect growth tomorrow.
Now, that doesn't mean the market will move straight up...
Investors will still worry about geopolitics and whatever news dominates the week.
But if businesses keep borrowing and banks keep lending, it tells us the economy is a lot stronger than the headlines suggest.
We mentioned above that C&I lending is a leading indicator. Credit usually moves before earnings. So when lending accelerates, it tells us the earnings cycle still has room to run.
The important point is that the data keeps sending the same message. Corporate America is borrowing again... which means companies are in growth mode.
Regards,
Rob Spivey
June 12, 2026
P.S. I was a guest on the Market Insider podcast earlier this week, where I took an even more in-depth look at today's market boom. We discussed credit conditions, corporate investment, and AI infrastructure... all through the lens of Uniform Accounting.
Check it out for free on YouTube right here.
