The National Association of Credit Management’s CMI report for May 2012 confirms another spring slump, but a third stagnant summer is not yet a certainty. It can now be said that the economy has experienced a third straight year of “spring swoon.” In 2010, this was provoked by a premature recovery that made the first quarter look stronger than it really was, and the 2011 culprits seemed to be the supply chain disruption from the earthquake in Japan, as well as the Arab Spring’s impact on oil prices. What seems to be the problem in 2012? One explanation holds that the European crisis has become this year’s “black swan” as it has affected everything from banks to exports. A second opinion contends there is nothing really wrong with the economic recovery, but that industry is just taking a breather. A third holds that the consumer is hibernating again as they react to everything from high jobless numbers to inflation.
If there are silver linings in this month’s report it is that favorable factors did not change much — the favorable index retreated from 60.5 to 60.2. Sales data actually improved from 60 to 61.2, but remains off the pace set earlier in the year when sales hit 64.4. Even better news came from new credit applications, which rose from 58.2 to 59.9. The retreat, and the bad news, was due largely to the decline in the amount of credit extended — down from 64.6 to 61.3. Part of that decline can be attributed to less credit being requested, and more of those asking for credit being denied.
The online CMI report for May 2012 contains the full commentary, complete with tables and graphs. CMI archives may also be viewed online.