U.S. Consumer Credit Shrinks by $17.5 Billion, Biggest Decline on Record

[marmar]

Consumer Credit in U.S. Declined in November by Most on Record
By Vincent Del Giudice


Jan. 8 (Bloomberg) -- Consumer credit in the U.S. dropped a record $17.5 billion in November as unemployment close to a 26- year high discouraged borrowing and banks limited access to loans.

The slump in credit to $2.46 trillion was more than anticipated and followed a revised $4.2 billion drop in October, Federal Reserve figures showed today in Washington. The median estimate of economists surveyed by Bloomberg News projected a decrease of $5 billion. The series of 10 straight declines was the longest since record-keeping began in 1943.

A labor market that’s shed 7.2 million jobs since the recession started in December 2007 is restraining consumer spending that accounts for about 70 percent of the economy. Fed policy makers have said tighter bank lending standards and reductions in credit lines are hampering the recovery.

“The consumer is battling some pretty fierce headwinds right now with double-digit unemployment rates, an inability to obtain credit, and looming tax hikes for wealthier Americans,” Chris Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York, said before the report. “Consumers are trying to wean themselves off of credit cards, and if they don’t, banks will help them.”

Consumer credit in October was revised from a previously reported $3.5 billion decline, and the forecast for November was based on the median of 32 estimates in a Bloomberg News survey. Projections ranged from decreases of $2 billion to $10 billion. Credit dropped at an 8.5 percent annual rate in November. ..........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aKVSJp3K0O_c&pos=1

[ixion]

1. and given an economy that was 70% consumer-driven

there will be no recover until the economy learns to live without the rampant consumption of crappy products.

[Robbien]

2. A lot of this has to do with banks cutting off new credit and increasing rates

on current balances.

[metapunditedgy]

3. Good for us! Let the kleptocrats fund their own corrupt empires! n/t