According to the Wall Street Journal, Americans' use of credit cards fell last May as more and more people lost jobs and were forced to tighten budgets.
By June, unemployment reached 9.5%, the highest in the last 25 years.
Not only credit card borrowing decreased. Bank loans fell, too, since banks became much stricter in all their consumer loan approval requirements. This is because loan delinquency has also been continuously rising.
In the first quarter of 2009, the total net worth of households was reported to have fallen by 2.6%. Even if the Obama administration's stimulus package has propped up Americans' income in May, people are still feeling the crunch and, as a result, are spending less and saving more than they have in the last 15 years.
There is concern that reduced borrowing and spending will further cripple the US economy since 70% of gross domestic product is made up of consumer spending.
Damned if you do and damned if you don't. It's a very difficult place to be in.
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3 comments:
I couldnt agree more, great post..
Well, the government's aching for them to spend, but I think people are going to follow their natural instinct and save in these times of hardship, not caring about the recent surge in stock market optimism
The article is far more interesting and different from similar ones connected with the same issue. Thank you for sharing.
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