Economic recovery is at a standstill with Americans increasing their savings and spending their money to pay off debts. According to the Federal Open Market Committee, household spending is increasing sluggishly due to low income growth, high unemployment rates, a decrease in household wealth and tight credit. The decline in household wealth has been attributed to a drop in share prices (e.g the S&P's 500), which in turn is mainly due to the European debt crisis. According to the FOMC report, consumer spending will further be slashed by the expiration of the home buyer tax credit in April 2010.
Another issue that was brought up is that although the percentage of mortgage borrowing and consumer credits has decreased, large companies are still able to obtain credits by selling public bonds while small businesses are experiencing more difficulties in getting credits from banks due to their past record of unsteady revenues.
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