Having lowered debt, Americans start borrowing again
Rising consumer confidence and banks that are more willing to lend are combining to end the Great Recession's frugality.
Maybe things are actually improving. A new report looking at some economic indicators suggests that after years of skimping, avoiding large purchases and trying to bring finances under control, Americans have enough confidence in the recovery to start taking on more debt. And lenders are loosening their purse strings.
The Wall Street Journal examined several of those indicators, the most notable being auto lending, which increased by $20 billion in the second quarter compared with the first, its largest gain since 2006. Other measures include the increasing availability of credit, as well as a decline in payment delinquency rates.
Experts say many Americans bit the financial bullet during the recession, being frugal with their funds by attempting to pay down, or even pay off, their debts. Those efforts are bearing some fruit.
Total consumer debt was down by $78 billion last quarter to $11.15 trillion -- the lowest level in seven years. The one exception, the paper says, is student debt, which now makes up nearly 9% of all consumer borrowing, compared with 3% just 10 years ago.
"A lot of families have worked hard to deleverage," Ezra Becker, the vice president of research at credit bureau TransUnion, told the newspaper. Becker says smaller debt burdens, along with rising housing prices and a lower jobless rate -- though still far from spectacular, to be sure -- are "making the consumer feel like it is OK to spend more."
On the flip side, lenders are coming out of the protective crouch they've been in since the depths of the recession and are relaxing their credit guidelines.
"Banks and lending institutions have really opened back up to people that normally would have been turned down for loans," Alan Helfman, the president of River Oaks Chrysler Jeep Dodge in Houston, told the newspaper. "I just sold a truck to a security guard who six months ago I would have turned away."
That dealership is also reporting very strong sales, up about 20% from the same time a year ago.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The stock market began the new trading week on the defensive note with small-cap stocks pacing the retreat. The Russell 2000 (-1.4%) and Nasdaq Composite (-1.1%) displayed relative weakness, while the S&P 500 lost 0.8% with all ten sectors ending in the red.
Global equities began showing some cracks overnight after China's Finance Minister Lou Jiwei poured cold water on hopes for new stimulus measures. Specifically, Mr. Lou said the government has no plans to change ... More
More Market News
New study finds members of this global elite are stashing an average $600 million each in cash -- 10 times more than a year ago.
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'