Consumer Credit Falls for 5th Month

Despite several signs of economic recovery peaking out through the doom and gloom of the recession, the credit market still has a ways to go according to a recent Federal Reserve report. Consumer credit fell $10.3 billion to $2.5 trillion in June, after having fallen by $5.38 billion in May.

The five-month streak of consumer credit loss marks the longest series of declines since 1991. Much of the reason behind the decline involves the slowdown of consumer spending, which has in turn been checked by rising unemployment, falling wages, and sliding home values. Thanks to a startling drop of income in June, people have opted to save their money rather than to spend it.

An average of economist estimates had consumer credit falling $5 billion in June, with the range of estimates starting at $1 billion to $11.9 billion. According to most analysts’ estimates, consumer credit will take extra time to recover, even after the recession continues to ease off, leaving lenders in limbo for an extended period of time.

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