Understanding Changes in Credit Supply and Demand
Tags: Decision Analytics, Fraud Management
The U.S. economy has experienced a record drop in consumer borrowing. Experian tracked a sample of credit-active consumers to show consumer deleveraging has occurred & demand for credit has declined.
In 2009, the U.S. economy experienced a record drop in consumer borrowing. According to the Federal Open Market Committee meeting notes released on Jan. 27, 2010, household spending remains constrained by a weak labor market, modest income growth, lower housing wealth and tight credit [author's emphasis]. The committee's outlook for 2010 suggests that while bank lending continues to contract, financial market conditions remain supportive of economic growth; however, economic recovery is likely to be moderate for a time [author's emphasis]. In recent months, the contraction in lending has been largely attributed to consumers reducing leverage, or ?consumer deleveraging. To understand the impact and implications of consumer deleveraging, Experian tracked a sample of 426,185 credit-active consumers, representative of the credit population, over a six-year period from 2004 Q2 to 2009 Q2.