For Immediate Release

April 6, 2009

CONNECTICUT’S CREDIT MARKET SLOWLY IMPROVING

Federal initiatives appear to be working

Connecticut businesses are reporting modest improvement in the availability of credit in the state and expect conditions to stay the same or improve slightly in the coming months.  Despite the poor economic conditions nationwide, recent government actions—including the federal stimulus package—are beginning to have a positive effect on business lending and the state’s credit environment.

Those are some of the finding from the first-quarter 2009 Connecticut Business & Industry Association (CBIA)/TD Banknorth Credit Survey released today.

“The recent efforts by the Federal Reserve, Congress and the U.S. Treasury to provide monetary and fiscal stimulus and promote consumer and business borrowing and spending are unprecedented. As a result, we’re seeing a sense of optimism not seen in recent quarters,” said Peter Gioia, CBIA vice president and economist.

Forty-seven percent of business executives responding to the survey said credit conditions right now are average, and 48 percent said they are fair or poor.  But they expect conditions to improve. Nearly two-thirds (63 percent) said Connecticut’s lending climate will get better or stay the same over the next three months.  That’s up from 53 percent last quarter.

“In an economic environment that is increasingly risk-averse, credit must continue to flow to Connecticut firms in order to ensure overall economic stability and allow businesses access to the capital necessary to meet weekly payrolls and promote continuity of day-to-day operations,” said Donald Klepper-Smith, chief economist and director of research at DataCore Partners in New Haven.

“Credit availability is an important issue for businesses that rely on the flow of credit to sustain their companies. The restoration of credit availability is a key ingredient in the economic recovery,” said Gioia.

The CBIA/TD Banknorth Total Credit Availability index rose to 22 in the first quarter of 2009, up from 21 last quarter and above the record low of 19, set in the third quarter 2008. Future credit conditions rose to 27, up from 22 last quarter and a record low of 12 in the third quarter 2008. The current credit conditions index dropped sharply, to 18.  (Any reading over 50 indicates a positive view of overall credit conditions, while a reading under 50 denotes deterioration.) The Total Credit Availability Index is a composite measurement of current credit availability (18) and future expectations (27).

CBIA/TD Banknorth Total Credit Availability Index      1Q09

                        CBIA/TD Banknorth Total Credit Availability                       22

                        CBIA/TD Banknorth Future Expectations Index                 27

                        CBIA/TD Banknorth Current Credit Availability                  18

The credit survey was conducted by CBIA and Klepper-Smith and sponsored by TD Banknorth.  The methodology used to determine the index is similar to that used by The Conference Board to calculate consumer confidence measures. The survey was e-mailed to Connecticut businesses in mid-March 2009. A total of 282 executives responded, for a 14 percent response rate and a margin of error of plus or minus 5 percent.

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CBIA is the state’s largest business organization, with 10,000 member companies.

Editor’s Note: 

For a copy of the survey, visit www.cbia.com/newsroom/surveys.

To arrange an interview with Peter Gioia, CBIA economist, or for more information, please contact Nancy Andrews, CBIA media relations manager, at 860-244-1957 or andrewsn@cbia.com.

 

For more information contact Nancy Andrews, CBIA media relations manager, at 860-244-1957 or andrewsn@cbia.com.

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