After six consecutive quarters of declines, US bank deposits rose in the fourth quarter of 2023. The streak of declines was the result of the US Federal Reserve’s reduction of its balance sheet (known as quantitative tightening) and increase in interest rates, partner Szilard Buksa and colleagues explain. Economists expect quantitative tightening to be phased out by 2025; accordingly, banks of all asset sizes saw an increase in deposits in the fourth quarter of 2023.
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A series of vertical stacked bar graphs show the total deposits at US financial institutions from the fourth quarter of 2016 through the first quarter of 2024. The data is broken down into 4 categories based on asset size: small (less than $10 billion), midcap ($10 billion to $100 billion), super regional (greater than $100 billion to $1 trillion), and largest (greater than $1 trillion). Total deposits grew steadily between Q4 2016 and Q1 2022, rising from roughly $13 trillion to nearly $20 trillion. After that, deposits dipped for six consecutive quarters, falling to about $18.5 trillion by Q3 2023. Deposits then began to slowly rise over the next two quarters.
Source: Federal Financial Institutions Examination Council.
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To read the article, see “US banks’ commercial deposits are back on a path to growth,” August 6, 2024.