U.S. Consumer Debt cut back.

As the US economy has been effected by fears of a recession December figures show the slowest growth in Consumer debt for eight months.

Consumer credit increased to $2.52 trillion, the Federal Reserve said today in Washington.

Borrowing in November was $17.1 billion in November which was higher than the $15.4 billion previously reported, whilst December figures of $4.5 billion released by the Federal Reserve reveal the drastic change in borrowing trends.

The actual $4.5 billion figure was lower than the $7.4 billion prediction. These cuts can be attributed to the fact that US households are being shackled by rising unemployment and declining property values coupled with tougher lending standardards has lead to what Economists refer to as ‘softer consumer credit’.

US economists are keen to stress the importance of consumer spending, be it on credit or otherwise as Chris Rupkey an economist at the Bank of Tokyo-Mitsubishi re-iterates “if they [the consumer] stop spending, the economy could well fall into recession”.

This plea is incongruent to the reality of credit and spending habits as American Express Co have had to decline more than 15% of applications as more customers and missing payments whilst MasterCard have restricted their policy of extending credit to customers.

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