Canada at risk as they face second recession
San Francisco, CA -- (SBWIRE) -- 09/27/2012 -- The Federal Reserve had noticed early in 2012 the consumer credit debt had shrunk by over $4 billion. This number seemed to be well below the $9 billion forecast of Wall Street Journal’s Reuters poll.
Job growth came to a screeching halt late August 2012, which allowed the Federal Reserve to pour additional money into the ever slowing economy. There were some analysts who noted that some Americans might show some concern over the faulty economy. This in turn lead to less willingness to run up credit card debt. Credit has been constantly expanding since 2010, after the recovery of the recession in 2007-2009. The first drop since August of 2011 happened in July 2012, during this decline.
The amount of credit in July, which includes revolving credit or credit cards, shrank over $4 billion. Credit data can be a little tricky to decipher, as cutting back on debt does not always lead to pessimism. People may be relying less on credit cards and getting better jobs that pay more money. The trend in credit card debt is worrisome since the decline of revolving credit in the months of July and August 2012. Hiring has begun to slow and the growth in factory activity has steadily declined.
Students are also having a hard time with the idea of carrying heavy student loans. The government continues debating whether or not they should keep the interest rates low for federal loans. However, Obama did sign legislation in July keeping the federal support for student loans already in place.
A relatively new data series that the Federal Reserve says is more sensitive to the economic trends, consumer credit flows, has also cooled down. The flow of consumer credit fell at an annual rate of over $39 billion in July 2012.
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