By: Ryan Dennin
During these tough times an industry that is hit harder than most is the consumer finance industry. There are 2 fundamental issues with why the consumer finance industry isn't growing during a recession. Is it simply that people aren't shopping as much? Or has credit become so tight that people wanting that new 42" Plasma just simply can't get approved? The reality is a little of both. It seems people are "saving" at an all time high, something Americans are notorious for not being great at. While at the same time banks are locked down on the supply of capital and becoming very picky as to who and why receives it. With retail dips, housing declines, and car sales approaching all time lows, the consumer finance companies are certainly taking their fair share of the losses. One Wachovia columnist says "that the personal savings rate at the start of 2009 was the highest it’s been since the 1990’s slowdown" The fact that Americans are becoming more conscience of what they spend, and saving vs. borrowing could have a positive impact as it starts to correct this imbalanced budget we have been living on for decades. Maybe this whole recession thing has it's perks after all...
Sources:
http://medillmoneymavens.com/2009/04/07/consumer-credit-drops-in-february-driven-by-high-savings-rates-and-tighter-credit/
http://www.senseoncents.com/2009/03/housing-prices-plummet-consumer-confidence-at-all-time-lows/
http://www.smallbusinessnewz.com/expertarticles/2009/02/06/times-are-changing-and-so-are-consumer-spending-habits
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