In recent years, buoyant economic conditions raised expectations for continued growth in income and employment for consumers, which along with rising levels of wealth, has led to growth in household debt that has outstripped growth in disposable personal income over the past five years. That expansion of debt has pushed consumer debt service burdens to new highs.
With the recent slowdown in the economy, rising personal bankruptcies, an increasing unemployment rate, and a modest deterioration in loan quality, lenders have tempered their outlook, tightening their standards somewhat for credit cards and installment loans.