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For Immediate Release
According to the second-quarter 2006 CBIA/TD Banknorth Credit Availability Index and Survey, released today, 39 percent of business respondents rated credit conditions in Connecticut as either good or excellent. That’s a nine percentage point drop from the previous quarter, and the lowest number in more than a year. Half of the respondents expected conditions to remain the same, up from 42 percent the previous quarter, and 12 percent expected conditions to deteriorate. “Financing is available for businesses looking to grow their companies and expand their product lines, and we are seeing many firms trying to secure funding before credit terms and rates change,” said TD Banknorth President and CEO John Patrick. “The Federal Reserve has increased rates some 16 times since mid-2004, and many executives are concerned that the Fed will continue it’s upward trend by raising rates above the current rate of 5.25 percent.” While the majority of respondents (80 percent) expected conditions to remain the same over the next three months, 15 percent expected conditions to worsen. Only five percent expected conditions to improve. “Given the prospects for higher inflation, a weakening U.S. dollar and the potential for higher interest rates, it’s clear that business executives are apprehensive about future credit conditions,” said Jason Giulietti, CBIA research economist. The survey measures business executives’ opinions on the health of Connecticut’s credit markets and consists of three separate indicators: the Total Credit Availability Index, the Future Expectations Index and the Current Credit Availability Index.
The CBIA/TD Banknorth Current Credit Availability Index, which indicates the health of the state’s credit markets and measures the quality of credit conditions right now across the state, had a reading of 52 in this survey. That’s down more than 20 points from a year ago. A reading above 50 indicates improvement in credit conditions, while readings below 50 indicate deterioration. The index is a composite measurement of total credit availability (75) and future expectations (29). “Executives are reporting some of the lowest ratings since the survey began more than two years ago,” said Donald Klepper-Smith, chief economist and director of research for DataCore Partners. “It’s clear that businesses are concerned about the state’s economic future and will most likely not seek credit to expand their business operations until they feel comfortable about the direction of the economy.” The survey was conducted by the Connecticut Business & Industry Association (CBIA) and Donald Klepper-Smith, chief economist and director of research for DataCore Partners. It was 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 conducted in July 2006, with 223 executives. The survey has a margin of error of plus or minus 6.5 percent. ### 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 Jason Giulietti, CBIA economist, or for more information, please contact Nancy Andrews, CBIA media relations manager, at 860-244-1957 or andrewsn@cbia.com. 350 Church
Street · Hartford, CT 06103-1126 · cbia.com/newsroom
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