Friday, November 06, 2009
Econoday reports that consumer credit contracted for a record eighth straight month in September as consumers tightened their belts and lenders tightened credit.
Between consumers sticking their money into savings and banks cutting back on loans, consumer credit continues to tighten and dramatically. Consumer credit outstanding fell $14.8 billion in September to extend a long run of declines.If people have taken on too much debt and are now undergoing the painful corrective process of getting out of debt, how could an easing of the rate of contraction be good news?
Revolving credit, mostly credit cards, fell $9.9 billion with non-revolving, mostly car loans, down $4.9 billion. What little good news there may be is that the rate of contraction is easing as consumer credit contracted at a 6.1 percent pace in the third quarter vs. 6.6 percent in the second quarter.