As credit lines are slashed, recovery could stall


Banking analyst Meredith Whitney sees the writing on the wall: credit card companies are cutting credit lines of worthy borrowers, which could hurt the U.S. economy and stall recovery. As even worthy consumers see their credit lines slashed, less and less credit will be available for spending. With lower credit limits, credit scores go down and even fewer people will be able to get credit to buy homes and cars. How can businesses start to turn around if no one is able to buy their products?

Whitney wrote in the Wall Street Journal that, "Few doubt the importance of consumer spending to the U.S. economy and its multiplier effect on the global economy, but what is under-appreciated is the role of credit-card availability in that spending."