For the first time since they were bailed out by Congress two years ago, it seems that many banks are finally starting to ease standards on lending for small businesses and individuals. However, despite the increased availability for credit nationwide, there is little demand for it anymore.
Many people have placed the blame of the slow economic recovery on the banks unwillingness to lend money. And since individuals and small businesses depend on banks for loans, analysts say that the lack of credit being given by banks has significantly reduced spending and hiring for consumers and small businesses, further slowing down recovery of the economy.
Now, as banks begin to increase credit, it seems that it may not have the effect needed to aid the U.S. economy. More and more banks are increasing availability for industrial and commercial loans. However, demand for credit is barely increasing, with most banks stating that demand was “about the same”. The public is concerned about debt, and is more reluctant than ever to use loans to make investments and purchases.
Overall, consumers are spending less and less to make up for the overspending that occurred for many people before the financial crisis began. Having credit is now undesirable for many who are just looking to save their money.
Photo courtesy: Andres Rueda/ Flickr
