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Credit Managers’ Index (CMI) Dipping

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Tags Booms and BustsFinancial MarketsBusiness CyclesMoney and Banking

03/31/2015
March’s economic report from the National Association of Credit Management dropped to the lowest it’s been this year. The combined index fell from 53.2 in February to 51.2 this month.

NACM economic Chris Kuehl had hoped the previous month's reading was just a fluke and he noted that we are now at the lowest point since the recession. The report monitors a variety of positive and negative factors related to credit such as rejection of credit applications, accounts placed for collection, disputes, dollar amount beyond terms. These factors are then calculated so that readings above 50 indicated expansion of credit and readings below 50 indicate a contraction of credit.

“The signal this sends is that many companies are not nearly as healthy as it has been assumed and that there is considerably less resilience in the business sector than assumed,” said Kuehl. “The year-over-year trend remains miserable and seems to be getting worse and thus far nearly all the blame can be laid at the feet of credit access,” Kuehl said. “There is just not a lot of confidence in those that are doing the credit offerings these days.”

Mark Thornton is a Senior Fellow at the Mises Institute and the book review editor of the Quarterly Journal of Austrian Economics. He has authored seven books and is a frequent guest on national radio shows.

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