"The second half of the year is shot," said Michael T. Darda, chief economist at the trading firm MKM Partners in Greenwich, Conn., who was until recently optimistic that the economy would continue expanding. "Access to capital and credit is essential to growth. If that access is restrained or blocked, the economic system takes a hit."
Companies that rely on credit are now delaying and canceling expansion plans as they struggle to secure finance.
Drew Greenblatt, president of Marlin Steel Wire Products, figured it would be easy to get a $300,000 bank loan to finance a new robot for his factory in Baltimore. His company, which makes parts for makers of home appliances, is growing and profitable, he said. His expansion would add three new jobs to an economy hungry for work.
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