We may earn commissions if you use the recommended services on this site.  

New York Fed Survey Reveals Highest Levels of Concerns Regarding Credit Access in Over a Decade

Latest Business News

Fears Over Credit Access and Employment Rise, New York Fed Survey Reveals

According to a recent survey conducted by the New York Federal Reserve, American consumers are increasingly concerned about their access to credit. The survey shows that nearly 60% of respondents believe that obtaining loans, credit cards, and mortgages has become more challenging compared to a year ago, marking the highest level of concern since June 2013.

Impact of Higher Interest Rates and Tighter Standards

The rising fears of credit access can be attributed to persistently higher interest rates and stricter lending standards at banks. Since early 2022, when the Federal Reserve began raising interest rates, concerns have been steadily increasing. The central bank has raised its key borrowing rate 11 times, totaling 5.25 percentage points, as part of its efforts to curb inflation.

Mixed Inflation Outlook

While the Federal Reserve focuses on controlling higher prices, the survey results indicate a mixed outlook on inflation. Expectations for inflation one year and five years ahead increased slightly by 0.1 percentage points, reaching 3.6% and 3% respectively. However, the three-year outlook decreased by 0.1 points to 2.8%. The Federal Reserve's inflation target is set at 2%.

Concerns about Commodity Inflation

The survey also reveals concerns about commodity inflation. Respondents' expectations for gas prices rose by 0.4 percentage points to 4.9%, while medical care saw an increase of 0.8 points to 9.2%. Expectations for food prices rose by 0.1 points to 5.3%, and both college education and rent saw increases of 0.2 points to 8.2% and 9.2% respectively.

Rising Worries about Employment

The survey highlights growing concerns about employment. The mean expectation of losing one's job in the next year rose by 2 percentage points to 13.8%, the highest level since April 2021. Interestingly, this increase comes despite an unemployment rate of just 3.8%, which is only 0.1 percentage points higher than its level a year ago. In conclusion, the New York Fed survey reveals mounting concerns among American consumers regarding credit access, employment stability, and the impact of inflation. These findings indicate the need for individuals and policymakers to closely monitor economic conditions and work towards ensuring broader access to credit and maintaining a stable job market.

Conclusion: Implications for New Businesses

The rising fears over credit access and employment, as revealed by the New York Fed survey, have significant implications for new businesses.

Access to Credit and Business Growth

Limited access to credit can stifle the growth of new businesses, as they often rely on loans for startup costs and operational expenses. If obtaining credit becomes more challenging, new businesses may struggle to secure the necessary funding, potentially impeding their growth and development.

Inflation and Cost Management

The mixed outlook on inflation, particularly the concerns about commodity inflation, could impact new businesses' cost management. Rising costs for goods and services, such as gas, medical care, food, and rent, can increase operational expenses, affecting profitability.

Employment Concerns and Talent Acquisition

Rising worries about employment stability can influence the talent acquisition strategies of new businesses. If job security concerns persist, attracting and retaining skilled employees may become more challenging, impacting the overall performance and success of the business. In conclusion, the findings of the New York Fed survey underscore the importance of monitoring economic conditions and adapting business strategies accordingly. New businesses must navigate these challenges effectively to ensure their sustainability and growth in a dynamic economic landscape.
Story First Published at: https://www.cnbc.com/2023/09/11/credit-crunch-worries-at-10-year-plus-high-new-york-fed-survey-says.html
Brought to you by BusinessFormation.io
Know Your State's Registered Agent Requirements: What is a Registered Agent
Learn How To Create An LLC: What Is An LLC and How To Start an LLC Online

LLC Filing & Registered Agent Services

Compare Online LLC Filing Services Today

We work with the market leaders in business formation and registered agent services.

Getting started is simple and inexpensive. Form your business today & secure your brand name before someone beats you to it! Click below to view the Top 3 Best LLC and registered agent service providers.
View Top 3 Providers Now

Filing An LLC Can Be Complicated

Streamline Your LLC Filing Online for $39

Northwest Registered Agent is the best-rated service for first time filers.

Get professional LLC formation & registered agent services for only $39 + state filing fee. This offers includes your full LLC setup, plus a private business address, lifetime support, and more.

Trusted by Millions. Save 82% Today.