Economic Indicators Economic Indicators and Credit Markets

Economic Indicators and Borrowing

Any indicator by itself, while important, will not provide the overall big picture on credit markets. However, when a combination of indicators consistently points in the same direction, this correlation can point to which direction the credit markets are headed. If the credit markets are headed toward crisis, these indicators can provide insight into how big the credit crisis will be and how afraid banks or investors are to take risk. If the fear is great enough, it can spill over into the general economy, causing recession. Conversely, when indicators are weakening, this suggests that banks and investors are willing to take risk. In this case, borrowing conditions are easy and businesses have access to the capital they need, causing the economy to expand.