For two weeks the price of stocks has been plunging on Wall Street which is causing a great deal of anxiety among economists in the United States. There are growing concerns that we may be heading back into a recession of the enormity experienced in 2008, or worse.
Anyone who is just working their way out of the financial difficulties they experienced during that year and the year to follow will need to pay special attention to events as they continue to unfold. If you are just at the point of building up your credit score to a point where you may be ready to apply for credit, you may want to put a hold on that – at least temporarily.
What is causing so much concern is that lower stock prices indicate that many Americans’ wealth is shrinking as well. With lower confidence in the market they will be less likely to invest, less likely to spend and employers will certainly be less likely to take on new hires.
According to an article published in Yahoo! Finance, when the Dow’s average plummeted by 513 points, it is indicative of the fact that investors have growing concern over the European debt crisis and the problems we are having here at home with our own national economy.
When these types of drops in stock prices become evident, consumers will invariably spend less money which will further compound the problem. As we watch our bank accounts thinning down we are less likely to make major purchases and this fact alone places more strain on already endangered jobs. We saw this with the automobile industry at the height of the debt crisis in 2008-09.
New reports released by the government state that consumer spending was reduced for the first time in almost two years, 20 months to be exact. Retailers across the board from budget stores to high end luxury shops are seeing a drop in spending which is also an indicator that another recession just might be on the horizon. Whenever consumer spending drops significantly, it is a direct reflection of the uncertainty among consumers.
For those who have been struggling to pull themselves out of a financial hole they found themselves in within recent years, this news is all the more depressing. If it were not for the fact that we have just begun to see the light of day after our most recent depression and if it were not for the fears infiltrating the EU that Spain and Italy would soon default on debt, it might not be so bad.
However, if things continue as they are going at the moment, now is not the time to apply for any new credit if at all possible. What you may want to do is get a copy of your credit report, make sure everything is accurate, and then sit tight until you see which way the wind is blowing. If the economy rebounds then you may want to apply for credit, but if it continues to be uncertain, hold tight a bit longer.
The point is, you have already been victim of a poor credit score and are trying to rebuild it step by step. While times of economic crisis are not the best times to apply for credit, you may be forced to do so under certain conditions. If you have no other alternative than to purchase on credit, at least take the time to shop around a bit for the best loan at the lowest interest rate. In other words, if at all possible protect yourself from becoming a victim once again of a floundering national economy.