A good trend for individuals though not as good for the banks who would prefer more credit at ridiculous rates. Is cash king again?
Americans are borrowing less for a number of reasons. They remain fearful about their job prospects and they are also trying to replenish depleted investments. The government reported Friday that employers cut an additional 85,000 jobs in December, bringing total job losses to more than 8 million since the recession began in December 2007.
Even consumers who would like to increase their borrowing are finding it hard to get credit at banks. Many banks, hit by the worst financial crisis since the 1930s, have tightened lending standards. While economists have worried for years about the low rate of U.S. savings, the concern now is that consumers could derail the recovery if they start saving too much of their incomes. Consumer spending accounts for 70 percent of total economic activity.
