American citizens have increased the amount of money they borrow, for buying new cars or paying for college. Consumer credit is at the lowest point in the last four years. "Consumer debt has increased by $1.3 billion, and an estimated of $7 billion in October." - Federal Reserve. This is a small increase in the annual rate which is currently $2.4 Trillion. In September the annual rate was $2.39 Trillion.
Economic growth is being held back due to the less borrowing of households and more saving due to the recession from December 2007. Consumers are accounted for %70 of economic activity. Which means, that %70 of the economic growth is responsible by the consumers.
As unemployment rises, the usage of money is being decreased, Slowing down the economy while people are saving all their money. Ellen Beeson Zentne who is a economist at Bank of Tokyo-Mitsubishi says " Household attitudes toward the use of credit cards soured during the Great Recession and it is going to take time before many people get comfortable with using them again ". Zetne also mentions consumer credit is growing at an annual rate of 4 percent. Which means, it will be a long time ti'll people start using credit because the levels of consumer credit need to normalize.
In the end, the people who are getting credit are for the reasons of buying student loans and credit cards. These two major reasons boost the flow of money in a long scale, due to recession it will take a long time till the people who have borrowed money can payback which in that time the interest rates will increase. A decline has also been showed in consumers buying credit cards.
After all this economic trouble, we can say that the economy is healing itself up and in time banks will be operational full time.
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