Tighter credit may mean a weaker economy, economist says

Credit tightening in March may be a harbinger of weaker economic times ahead, said an economist who studied a survey of companies’ credit managers.

Chris Kuehl, reviewing the survey by the National Association of Credit Management, cited an increase in rejections of credit applications in March, more credit accounts placed with collection teams and other signs of deterioration.

“There is just not a lot of confidence in those that are doing the credit offerings these days,” Kuehl said in the group’s report.

An index generated from the surveys fell to 51.2 in March from 53.2 in February. Any reading above 50 supports continued expansion of the economy. Before February’s dip from 55.1, the index had been near or above 55 for more than a year.

“We now know the readings of the last month were not a fluke or some temporary aberration that could be marked off as something related to the weather,” Kuehl said.

The monthly credit managers report precedes the more widely watched Institute of Supply Management’s purchasing managers index, which is due out Wednesday morning.

This story was originally published March 31, 2015 at 3:23 PM with the headline "Tighter credit may mean a weaker economy, economist says."