First Quarter 2021: Waning Case Counts and Fiscal Stimulus Fueled Growth

June 4, 2021

First Glance 12L provides a quarterly look at banking and economic conditions within the Federal Reserve System’s Twelfth District. During 1Q21, District bank loan and deposit growth rebounded, supported primarily by renewed Paycheck Protection Program (PPP) activity. Brighter economic prospects prompted lower—and in some cases negative—credit loss provisions. Problem loan ratios receded, tamped down by stimulus-related relief and improved economic activity. There remains lingering uncertainty how credit and liquidity will fare once forbearance and stimulus fade. The labor market continued to recover amid optimism over vaccinations and reopening. By April 2021 nonfarm payrolls exceeded pre-pandemic levels in Idaho and Utah and were within 5% of pre-COVID levels in Arizona and Washington, but they had further to recover in other District states. Home prices appreciated at double-digit annual rates in most District states, supported by low interest rates, tight for-sale inventories, and demographic factors. Commercial real estate challenges were increasingly concentrated in the office sector, which saw rising vacancy rates and declining rents across the District. The report recaps several hot topics related to cyber, regulatory compliance, fintech, drought, and various lending and funding risks, and takes a closer look at residential real estate conditions.