By Kasra Kangarloo
WASHINGTON (MNI) – U.S. consumer credit for May is expected to
continue its steady rate of decline, with the Market News International
survey of economists predicting a $2 billion drop from April.
The bulk of the drop is expected to be from the revolving credit
figure, which has fallen for 19 consecutive months. Nonrevolving credit
is also be expected to register losses, as the figure consistently
correlates to the monthly retail sales figure — which fell 1.2% in May.
According to Julia Coranada, senior U.S. Economist at PNB Paribas,
the pace of decline in consumer credit has slowed and may be entering a
period of stabilization.
The issues going forward include ongoing bank losses, lack of
consumer demand for auto vehicles, and constrained credit limits. Auto
sales have been gradually creeping higher, but bank lending still
remains drastically low.
“Banks just arent looking to aggressively lend,” Coranada said,
echoing remarks made Wednesday by Dallas Federal Reserve President
Richard Fisher. He said in an interview on business channel CNBC that
while banks are swollen with credit — due to the Feds accommodative
monetary policy — lending has yet to expand.
Coranada also observed that the banking sector is still in the
process of consolidation, with bank failures this year totaling 86 so
far.
“Its both a supply and demand issue,” Coranada said. “The
consumers relationship to their debt has changed.”
** Market News International Washington Bureau: 202-371-2121 **
[TOPICS: M$U$$$,MAUDS$,MK$$$$]
