Am I the Only One That Thinks it Will Get Worse?

http://www.iht.com/articles/2007/11/28/business/lend.php#end_main

As credit dries up in U.S., concerns mount about recession
By Peter S. Goodman Published: November 28, 2007

NEW YORK: Credit flowing to American companies is drying up at a pace not seen in decades, threatening the creation of new jobs and the expansion of businesses, while intensifying worries that the economy may be headed for recession.

The combined value of two major sources of credit - outstanding commercial and industrial bank loans, and short-term loans known as commercial paper - peaked at about $3.3 trillion in August, according to data from the Federal Reserve. By mid-November, such credit was down to $3 trillion, a drop of nearly 9 percent.

Not once in the years since the Fed began tracking such numbers in 1973 have these arteries of finance constricted so rapidly. Smaller declines preceded three recessions going back to 1975.

"This is a very big deal," said Andrew Tilton, a senior economist in the U.S. Economic Research Group at Goldman Sachs. "You're basically crimping the growth of the more vulnerable companies. If they can't borrow the money, their options are much more limited. They'd have to have less ambitious hiring plans, buy less machinery and cancel projects."

When credit to business slows significantly, a drop-off in investment by businesses has generally followed closely, Tilton added, suggesting that the tightening increases the prospect of recession.

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Because it has the world's largest economy, any recession in the United States would probably have a ripple effect across the globe because U.S. consumers would be buying fewer goods from abroad. Europe, so far at least, has not been subjected to a similar tightening of credit that would prompt a broader economic contraction, though available statistics provide an incomplete picture, analysts said.