What does the Silicon Valley Bank collapse mean for the economy?

Some economists appear to be modestly lowering their forecasts for economic growth this year.

The reason for this is that the Silicon Valley bank crisis and smaller banks are already weak.

Goldman Sachs made a statement that it has lowered its forecast for GDP growth this year to 1.2%.

Mark Zandi estimates that tighter bank lending standards will reduce 2023 GDP growth by a little over two-tenths of a percentage point to 1.2%.

The collapse of the Silicon Valley bank is the biggest failure of a US-based financial institution since the collapse of Washington Mutual in 2008.

One of the main factors in the collapse of Silicon Valley Bank was the US Federal Reserve raising interest rates.

Silicon Valley Bank's customers were largely start-ups and other companies that had become increasingly in need of cash over the past year, fueling demand for loans.

The increase in rates was also a major contributor to the Silicon Valley Bank meltdown, the main reason being high interest rates.