Wednesday, February 13, 2008

SLOOS II Consumer Loans

Yesterday I looked at the most recent Senior Loan Officer Opinion Survey (SLOOS) in the context of commercial real estate loans. There is also an important consumer loans section to this report.

As many of you know, consumer spending accounts for almost 70% of GDP. So if consumer spending decreases then chances are good that we will enter a recession. Recent interest rate cuts by the Federal Reserve (monetary policy) has been aimed at keeping consumer spending from stalling (among other things). If that wasn't enough, the "actual" government is stepping in to provide an "economic stimulus" package (fiscal policy) in order to keep things moving forward.

When the market fails it is the duty of the government to step in, right? Well, back to the SLOOS survey, 10% of respondents reported that they had tightened their lending standards on credit card loans. While this may seem like a small number, but when it happens to you it might as well be 100%.

35% of domestic institutions indicated that they experienced weaker demand for consumer loans of all types. This may have something to do with weaker demand for home equity lines of credit.

No comments: