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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