Wall Street's crisis hitting small business
Some companies are having problems getting loans, and others are being informed of reduced credit lines.
The ripple effect of the financial turmoil on Wall Street is spreading more deeply into the American economy.
The local hardware store is finding it more difficult to get the loan it needs to buy its summer gardening merchandise. Ivy-covered colleges and universities are finding that donors have second thoughts about contributions until the stock market quiets down. Some small businesses that count on using credit cards to finance their business are getting letters informing them of reductions in their credit lines or increases in their rates.
One sign of the blues on Main Street: consumer-confidence surveys. On Tuesday, the Conference Board said that consumer confidence had dropped to a level not seen since the recessions of 1980 and 1973.
"The plunge is directly related to the turmoil in the financial system," says Mr. Zandi.
Economists are particularly concerned about one development: CIT Group, a commercial finance company that lends to small business, used a $7.3 billion line of credit from banks because it was having trouble selling its debt.
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