U.S. Consumer Credit Drop Indicates Continued Reluctance to Spend

Reuters.com is reporting that the U.S. consumer credit plummeted by $14.80 billion in the month of September according to statistics that were compiled by the Federal Reserve. This amount is significantly larger than the total that was predicted by economic analysts when they were polled by Reuters prior to the information being released. The analysts forecasted a U.S. consumer credit decrease of $10 billion, which is $4.8 billion less than the actual drop.

The overwhelming decrease in consumer credit is a glaring indication that American citizens continue to feel reluctant about spending and that they prefer to reduce their debt as opposed to digging themselves an even deeper hole. According to Forbes.com, our nation's total consumer credit has reached its lowest total since June of 2007.

Despite the belief that the economy is no longer in a recession, the consumer credit was largely impacted by the fact that banks have tightened their access to loans. With our nation's unemployment rate at its highest percentage in over a quarter-century, experts are predicting that the economic recovery is going to be an incredibly lengthy and drawn-out process.

Chief financial economist Chris Rupkey provided a comment in response to the drastic consumer credit drop, saying, "This is truly an ugly report in what it portends for consumer spending. If consumers are indeed the key to recovery, this economic expansion from the recession could be the weakest and most jobless one yet."