Which economic indicator signals potential tightening in credit conditions?

Slower loan growth is a significant economic indicator that can signal potential tightening in credit conditions. When loan growth slows, it generally suggests that banks and financial institutions are becoming more cautious about extending credit. This can happen for a variety of reasons, including rising interest rates, increased borrower risk, or tightening regulatory environments.

In a tighter credit market, individuals and businesses may find it more difficult to obtain loans, which can in turn slow economic growth. Slower loan growth may indicate that financial institutions are tightening their lending standards, which can be a response to economic uncertainty or potential deterioration in credit quality.

The other options do not directly signify potential tightening in credit conditions. Higher employment rates typically suggest a healthy economy where borrowing is likely to increase rather than decrease. Increasing consumer confidence tends to encourage spending and borrowing, rather than a tightening of credit. Rising stock prices often reflect a positive economic outlook and can lead to greater borrowing as businesses feel more secure in investing and expanding. Therefore, slower loan growth stands out as a clear signal of potential credit tightening.