Outstanding credit dropped in July

Seems like consumer spending alone will not be the answer to a quick economic recovery. The latest consumer credit report from the Fed revealed that credit outstanding figures dropped by $21.6 billion in July – a record six-month decline.

This drop reflects how consumers are trying to lessen debt and how banks are reluctant to provide clients with a longer credit line according to analysts. Revolving credit (like credit card) dropped by $6.1 billion while non-revolving credit (like car loans) fell by $15.4 billion.

Many economists are optimistic that the recession has finally bottomed out and the economy’s on the way back to recovery and that the numbers will be padded as inventories are replenished and some sectors steadily gain ground.

Still, consumer spending and debt will have to wait until the unemployment problem starts to ease. The lack on steady income streams have made consumers wary of incurring more debt than they now have.

Source: CNN

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