Part 7/8:
The downward spiral of increased debt and reduced spending translates into a precarious economic landscape. As the rate at which consumers fall into delinquency escalates, the banks' tightening of credit standards compounds the crisis. Admeter refers to research showing that delinquency rates are rising, evidenced by data from the Federal Reserve. In response, banks typically reduce available credit, further constraining consumers who might still require access to funds.
The interrelation between retail performance and credit availability cannot be overstated. As consumers lean towards borrowing, the higher the delinquency rates rise, the tighter banks tighten their credit—a vicious cycle leading to more significant economic instability.