According to a survey conducted by the New York Federal Reserve, American households are increasingly feeling the squeeze on their access to credit. The share of respondents who feel that their access to credit is deteriorating has reached a new high. The survey also found that Americans' inflation expectations have increased in the short-term and medium-term, but decreased in the long-term. Fed Chair Jerome Powell had previously warned that the banking stress that started with Silicon Valley Bank could trigger a credit crunch, which would have “significant” implications for an already slowing economy. The survey found that respondents were more pessimistic about future credit availability, with the share of households expecting it to be harder to obtain credit a year from now also increasing. Furthermore, the perceived probability of missing a minimum debt payment in the next three months has also increased. Despite this, the percentage of households finding it either “much harder” or “somewhat harder” to get credit is at its highest since at least 2014. Securing a credit line had already become more difficult in the last year, with the Fed raising interest rates nine consecutive times. The survey highlights that tighter credit conditions mean lenders raise the bar for borrowers, and households have to meet stricter parameters to obtain a loan.
Credit crunch hits Americans