EconomicCrisis.US

The U.S. banking industry may have pulled back from the brink, but finance executives say they still face hurdles that will tighten credit and delay an economic rebound.

In recent months the industry has shown signs of recovery from the worst recession in 70 years, which crushed some of the nation’s biggest banks and forced others to write down tens of billions of dollars in toxic assets.

But with banks reluctant to lend and consumers afraid of borrowing, chances of a strong and quick economic recovery are slim, bankers and investors said at the Reuters Global Finance Summit this week.
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Recent evidence from the Detroit Three and the broader economy is making it difficult to deny that the U.S. economy — even including Michigan — is beginning to heal.

That’s despite the fact that many people remain out of work, housing prices are weak and foreclosures continue.

In the last two weeks: Ford Motor Co. reported a nearly $1-billion third-quarter profit. The Chrysler Group said it generated an undisclosed level of cash in September. And General Motors Co. said it has generated $3.3 billion in cash since its July 10 exit from bankruptcy.
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Small-business owners haven’t seen much improvement in the U.S. economy and more are expected to cut jobs instead of adding them over the next three months, a monthly survey shows.

The National Federation of Independent Business Index of Small Business Optimism edged up 0.3 of a point in October to a reading 89.1, but the index has been below 90 for six straight quarters. In the 1980-82 recession, by comparison, the index fell below 90 for only one quarter.

“The October gain was minor, so the good news is still less bad news,” said William Dunkelberg, NFIB’s chief economist, in a statement.
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The Federal Reserve could remove some of the extraordinary support it has extended to the U.S. economy once the recovery looks solid and monthly job growth has returned, a top U.S. central bank official told the Financial Times.

In an interview posted on the newspaper’s website on Sunday, St. Louis Federal Reserve Bank President James Bullard said he would not favor tightening monetary policy before recovery was well-established.

“You are going to need to have jobs growth and you are going to need to have unemployment declining,” said Bullard, who moves into a voting seat on the Fed’s rate-setting panel next year.
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