Consumer Credit Takes Huge Plunge as Lenders Hold on to Their Money
Tuesday, January 12, 2010

Efforts by Americans to pay down their debts have not yielded more available credit. The Federal Reserve has reported that consumer credit plunged $17.5 billion in November, as banks continued to pull back on lending. From September 2008 through November of last year, consumer credit outstanding declined 4.4%. Fed Governor Elizabeth Duke reportedly said in a January 4 speech that bank loans fell at an annual rate of more than 11% in the third quarter on 2009.
Consumer credit has declined for ten straight months, the longest slide since record-keeping began in 1943.
“Double-digit unemployment is eroding consumer confidence and the uncertainty is prompting consumers to pay down their credit card debts,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, told Bloomberg. “We have not seen such a wholesale reduction in consumer credit since the last time we had double-digit unemployment rate following the early ‘80s recessions.”
-Noel Brinkerhoff
Consumer Credit in U.S. Drops Record $17.5 Billion in November (by Vincent Del Giudice, Bloomberg)
Consumer Credit Outstanding Continues To Decline (by Daniel Indiviglio, The Atlantic)
Consumer Credit Report (Federal Reserve)
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