Philly business yearns for a tax cut to combat a regional slowdown
U.S. stock prices keep hitting record highs, as hope and greed push past fear. But back on the ground, where real companies add locations and hire people, “we’ve seen a little bit of a slowdown,” says Bruce Van Saun, chief executive of Citizens Financial Group, whose Citizens Bank has the biggest branch network in Philadelphia and its suburbs.
Loans to businesses by U.S. banks rose rapidly last year and early this year, as commercial real estate developers and private-company investors rushed to borrow cheap before the Federal Reserve’s threatened rate hikes. But that little rush is over, Van Saun told me Friday, as area banks reported slow third-quarter loan growth, compared with last year.
Loan growth is “weak” for Citizens and for rival banks; “this is an industry issue,” bank stocks analyst R. Scott Siefers told clients of Sandler O’Neill + Partners, New York, in a report. Indeed, Citizens shares rose Friday and Monday to their second-highest closings since the bank went public three years ago, after the bank reported higher-than-expected third-quarter profits, thanks partly to cost cuts.
U.S. economic growth now “hinges on Washington getting some work done around the growth agenda, such as tax cuts,” Van Saun said. “Get something done in Washington and you’ll see a release of those ‘animal spirits.’??” He’s especially interested in a proposal for more-rapid expensing of capital investments against current taxes, which could be “a real tonic to pick up growth.”
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