Daily Real Estate News  |  October 8, 2009  |   Tight Credit, Big Payments Still a Concern
The continuing credit crunch is slowing the economic recovery.

The Federal Reserve reported Wednesday that total consumer credit outstanding fell $12 billion in August. It was the seventh-straight month credit has declined.

The cutback reflects not only banks reluctance to lend, but also people’s reluctance and inability to borrow. "The U.S. economy is geared for consumption," says Jason DeSena Trennert, chief investment strategist at Strategas Investment Partners. "It's going to be hard to get it to grow if the consumer is going to continue to [reduce debt].”

A significant part of the challenge is the amount of mortgage debt, which remains high by historic standards and is hard to pay down. As of June 30, mortgage debt equaled 95 percent of disposable personal income. That was down from 100 percent in 2007, but up from 65 percent in 1999.

Source: The Wall Street Journal, Tom Lauricella, Jason Zweig, and Conor Dougherty (10/08/2009)