The combination of an already tight credit market and a reluctance to fall deeper into debt contributed to the ninth straight month of declining consumer borrowing in October, the Federal Reserve reported today.
Consumer credit fell at a seasonally adjusted annual rate of 1.7 percent, or $3.5 billion, to$2.48 trillion in October, the Fed reported. The figure includes most loans, such as credit cards and car loans – but not real estate.
Revolving credit, the category that covers credit cards, fell 9.3 percent, while borrowing in the category that includes auto loans, non-revolving credit, rose at an annual rate of 2.6 percent.
There was some good news in the overall numbers for earlier in the year. Revised figures for the third quarter showed that consumer credit declined less than previously reported. For the third quarter, the decrease was at a revised 3.3 percent annual rate, compared to the 6.1 percent decline the Fed originally estimated.
The weak demand for credit, particularly from top-rated borrowers, has contributed to the banking sector’s weakness, accelerated by commercial real estate losses. The unabated decline in consumer borrowing is holding back a more robust economic recovery, economists say.
Consumer spending makes up about two-thirds of the gross domestic product.
“Despite the general improvement in financial conditions, credit remains tight for many borrowers, particularly bank-dependent borrowers such as households and small businesses,” Fed Chairman Ben Bernanke said today. “And the job market, though no longer contracting at the pace we saw in 2008 and earlier this year, remains weak. Household spending is unlikely to grow rapidly when people remain worried about job security and have limited access to credit.”
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Maybe this will help make the danger of fiat money clear.
Imagine you and me are setting across from each other. We create enough money to represent all of the world’s wealth. Each one of us has one SUPER Dollar in front of him.
You own half of everything and so do I.
I’m the government though. I get bribed into creating a Central Bank.
You’re not doing what I want you to be doing so I print up myself eight more SUPER Dollars to manipulate you with.
All of a sudden your SUPER Dollar only represents one tenth of the wealth of the world!
That isn’t the only thing though. You need to get busy and get to work because YOU’VE BEEN STIFFED with the bill for the money I PRINTED UP to get YOU TO DO what I WANTED.
That to me represents what has been happening to the economy, and us, and why so many of our occupations just can’t keep up with the fake money presses.
They have been beating us with our own stick!!!!1