The US economy continues to shrink as consumer spending plunges to a 28-year low according to the most recent figures.
With unemployment hitting a 14-year low and falling home prices, millions are asking banks for help to keep a roof over their heads:
“What I’m trying to do is to see if they can help us adjust our loans in an affordable way, so that I can keep my three kids, my family, in the house,” said one New Yorker demonstrating outside Morgan Stanley.
The grim reports have partially overshadowed an announcement by the Federal Reserve Bank that it plans to use more than 600 billion euros to extend more credit to consumers and businesses.
“Millions of Americans cannot find affordable financing for their basic credit needs,” said Treasury Secretary Henry Paulson.
“And credit card rates are climbing, making it more expensive for families to finance everyday purchases. This lack of affordable consumer credit undermines consumer spending and as a result weakens our economy.”
Consumer spending accounts for two thirds of economic activity in the US.
Many analysts believe the US has already joined Europe in recession, and predict an accelerated decline in the fourth quarter lasting into 2009.