Monday, July 26, 2010
Consumer credit keeps rolling downhill.
As you can see from this longer term year over year chart a sustained decline in lending has not occurred since this data series began at the end of World War II. This is just one example of how this recession is different than all other post WWII slowdowns.
Looking at graph #2 for a shorter time period one again sees the steady decline in consumer credit. Compare this to the early 90's where consumer credit levelled off but did not decline.
In my opinion until the employment numbers start to seriously improve and home prices start creeping upwards we are going to see continued declines in consumer credit and thus sluggish growth (at best) in the overall economy.
Source: Federal Reserve