However, we did see marginal improvement for the prime mortgage sub-component.
Net Percentage of Domestic Respondents Reporting Stronger Demand for Mortgage Loans
Notes: After showing some signs of recovery demand for residential mortgages has once again begun to drop according to the survey.
Net Percentage of Domestic Respondents Tightening Standards on Consumer Loans
Notes: This graph implies tighter lending standards for credit cards and consumer loans could have an adverse effect on consumer spending. I agree with this assumption and do not see US GDP growth to move above trend until post 2010, mostly due to a decrease on consumer spending.
All in all in my opinion the implications of this survey are that things will get worse before they get better. Not only are tough times at hand for consumers, but also for businesses and the real estate sector. Over the next couple months, I expect we will see disappointing holiday sales, which should lead to lower than currently anticipated 4Q08 earnings and a prolonged period of below trend economic growth. This will likely continue to stoke the current volatility we have seen in the worlds' financial markets.
