July marks a pivotal analytical period as credit and debits plunge
San Francisco, CA -- (SBWIRE) -- 10/08/2012 -- According to the Federal Reserve, consumer credit took a $3.28 billion plunge in July. There are a number of possibilities for the shrink in credit and debt.
According to analysts, credit reports and surveys are difficult to interpret, as there are many factors that have a hand in the results. Their predictions for the future rely on these factors. Some analysts advise that the drop could be attributed to the public’s view of the economy.
Businesses prefer to not rely on credit for their purchases, out of precaution that they may not be able to pay them back. Analysts say that the public’s refusal to rely on credit results in a drop in debts.
Another factor might not be in the hands of consumers at all. In fact they can be caused by creditors not making loans to consumers because of the instability of the economy as well.
Economist for JPMorgan, David Silver stated "(The data) looks consistent with the lackluster gains in consumer spending reported elsewhere.”
While the Federal Reserve is a leader in credit statistics, they do not release quarterly data in reference to student loans. Last July there was a 24.8% increase of governmental loans to student, which was actually a plunge when compared to a 30% increase during the course of a 12 month period up to June.
There are some professional opinions on this student loan plunge. Economist Paul Edelstein, from IHS Global Insight in Lexington, Massachusetts, believes that the drop could be related to student perceptions of the current governmental debates at the time. Congress’ debate over whether or not to keep the student loan interest rates lower could have cause students to be more cautious and not take out loans.
Obama, did sign a legislation to keep federal support ongoing for student loans despite the debate.
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