Consumer Lending Holds Up in Midsize Cities

Washington, DC, March 30, 2009--Consumer-lending has increased in numerous midsize cities in the U.S., a sign they are riding out the recession better than big cities and rural towns, an analysis of credit data shows, according to a story in the Wall Street Journal.

As banks pull back on risk taking across the nation, consumer-loan balances in places like Huntsville, Ala., are rising. In Huntsville, a metropolitan area of 376,000 that is home to many government contractors, borrowing increased 13.2% per household in last year's fourth quarter, compared with the year-earlier period, the Journal reported.

Similar-size cities such as McAllen and Brownsville, Texas; Yakima, Wash; Provo, Utah, and Lafayette, La., also saw consumer-loan balances rise by more than 8% year-over-year.

During the economic crisis, the banking industry has been criticized for not lending enough, contributing to the slowdown in economic activity. The data show that in some places, banks feel comfortable enough about local economies to lend more to consumers. Across parts of California, Florida and Michigan, on the other hand, consumer-credit balances have been falling, the data indicate.

"The large metro areas are definitely hit by the finance or housing problems," Steve Cochrane, managing director of Moody's Economy.com, told the Journal. "The smallest are often going nowhere." But, "many midsize metros in the country's midsection should come out of this all right."

Some of the better-performing cities didn't experience speculative real-estate bubbles, leaving them with more solid household-credit conditions, which are conducive to lending.