Recently released numbers from the Federal Reserve show that consumer credit in the United States contracted again in March.

According to a recent Bloomberg article, consumer credit fell by $1.11 billion in March, after an $8.1 billion plummet in February.

This figure isn’t jaw-dropping, but is significantly higher than the $4 billion drop predicted by many economists.

At a time when the jobless rate is higher than it’s been in 25 years,  a decrease of this magnitude isn’t entirely surprising, but March’s drop was the largest since records were first kept in 1943.

Here’s a quick summary of some of what the report found:

• Both revolving and non-revolving debt went down by more than $5 billion in March.
• Because most banks and lenders are expecting more delinquencies and financial losses this year, many are tightening lending standards, making loans harder to come by.
• Car sales decreased 37 percent in March of 2009 compared to March of 2008; however, sales incentives were up about 30 percent to approximately $3,169 per vehicle.
• Consumer spending was up at a rate of about 2.2 percent in the first quarter, a potentially promising figure, since it represents an increase over last year.

The (Potentially) Good News About the Economy

The results of the Federal Reserve’s stress tests for banks could improve consumer and investor confidence, according to some sources.

These tests, designed to determine how well suited many large banks are for difficult economic times, are expected to show which banks need to raise capital and which ones do not.

Preliminary figures show that several major banks, including JPMorgan Chase & Co., American Express Co., Goldman Sachs Group, Bank of New York Mellon Corp., MetLife Inc., Capital One Financial Corp. and State Street Corp. have been assessed as not needing to raise any more capital.

Some news outlets have speculated that some of these banks may try to repay TARP money lent by the federal government.

How You May Be Affected

Overall, if you’re looking to take out a loan or open a new credit card account, you may still find serious roadblocks in your way.

Banks are apparently still holding back on offering consumer loans.

This may not bring enough good news to all-- people are still in financial turmoil and filing bankruptcy.

Tags: consumer credit, Consumer spending, economy