Banks are turning cautious on lending, according to the Fed. What it means for the economy

U.S. banks are starting to tighten their lending standards amid growing concern over the underlying health of the economy, according to a new Federal Reserve survey.The Fed's latest Senior Loan Officer Opinion Survey on Bank Lending Practices for October, published Nov. 2, showed an uneven credit backdrop in the third quarter, with smaller businesses, riskier households and commercial property in particular facing a lending squeeze.The latest quarterly SLOOS study for October — which pulled together responses from 61 domestic banks and 18 U.S. branches of foreign lenders — covered changes in lending standards, terms and demand during the third quarter.The survey tracks banks' reported lending standards, terms and demand, not actual loan volumes, offering a snapshot of evolving credit conditions and sentiment.Small businesses feel the squeezeCommercial and industrial lending to large and middle-market firms was broadly unchanged from the previous survey — but banks tightened lending to smaller businesses."Banks reported tightening standards for premiums charged on riskier loans for firms of all sizes," the report noted. Lenders pointed to a less favorable or more uncertain economic ...