U.S. Loan Balances Decrease ... Again!

Online, May 10, 2010 (Newswire.com) - The declining rate of consumer and business borrowing has and continues to be a growing concern to many economic analysts and governmental policy experts. Many policy experts have warned that, unless the current rate of borrowing by business and industry, as well as individuals increases, the rate of borrowing (which has declined in each of the past 13 months, with the exception of January, 2010) could delay the economy's recovery from the worst recession since the 1970s (some analysts have said the recession is the worst economic downturn since the Great Depression of the 1930s).

Ironically, economists have been concerned for years with American consumers' chronically low savings rate, which has been coupled with a "consumption-based" economic system fueled by an ever larger credit card debt level. Now experts are worried that the opposite problem is the case. A lower rate of borrowing means less "spendable" money and a decreased demand for goods and services, which affects taxes, wages and every sector of the larger national economy. A resurgence in personal consumer lending is seen by many economists as critical to any economic recovery.

According to the report by the Federal Reserve, overall consumer borrowing fell by $11.5 billion in February. Federal Reserve Chairman Ben Bernanke commented that the economy seems to have stabilized and is growing again but threats remain. We are far from being out of the woods," Bernanke told a business audience in Dallas. In fact, unemployment remains at high levels and this is has a chilling effect on the confidence of potential borrowers - many of which are opting to defer business loans or other credit options until after the economic recovery strengthens.

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