Consumer Credit Drops Again in June
Aug 9th, 2010 @ 5:15 AM by Debbie Dragon
According to the Feds Credit report, borrowing once again dropped in the month of June. This will mark the 16th drop over the last 17 months. While this is bleak news for the struggling economy the drop is actually much lower than earlier predicted at 1.3 billion. In comparison, May’s drop was much higher coming in at 5.3 billion. This does however mark the 21st straight month of less credit card use by Americans.
It is clear from looking at the figures that Americans are being cautious. While many are still out of work others fear that the economy has not recovered enough to open up their pocketbooks. When it comes right down to it people across the board are borrowing less. While many are doing this willingly, others simply don’t have a choice. Loans across the board are very hard to come by these days.
Economists are quick to say that spending might not increase anytime soon. They say that people are being cautious and until unemployment starts to subside people will continue to be very careful when it comes to taking on any kind of new debt. In another report this week it is clear that unemployment is not yet improving as it remained steady across the nation.
“As long as income and employment do not show marked improvements, consumers will avoid taking on new debt,” said Gregory Daco, senior economist at IHS Global Insight. “Consumers remain bound by a weak labor market … high debt levels and a fragile housing market.”
Since July of 2008 when the recession began, consumer credit has taken a huge plunge, having fallen by over $160 billion. Even worse, household worth took a huge hit and is down over $11 trillion since the spring of 2007.
The report, released by the Feds does not take into account home mortgages and lines or home equity credit lines. The report does however include credit card debt, auto loans and other types of credit that are not backed by real estate.
While credit was down, saving was actually up. Savings rose across the nation. Economists in the past were worried that we weren’t saving enough as a nation, but now are worried that people are saving instead of spending.
Debbie Dragon is a full time freelance writer and the co-owner of ReliableWriters.com.