We're ready to borrow and spend
Tuesday, August 06, 2013 11:15 AM
Americans have made progress putting their finances in order and are ready to borrow again, providing another driver of spending and growth, Bloomberg reported.
Household net worth soared to a record high in the first quarter, Federal Reserve data shows, and the ratio of consumer debt to income matched the lowest in 33 years. Consumer loans are rising, and the American Bankers Association reports that the share of delinquencies on bank cards is the smallest since 1990.
"Household finances are in the best shape in decades," said Joseph Carson, director of global economic research at AllianceBernstein LP in New York, which has $435 billion in assets under management. "We now have a creditworthy borrower. It's a powerful ingredient" for the U.S. expansion and "definitely a step up from where we have been."
Credit is thawing gradually for residential mortgages, one reason new-home purchases in June reached the highest since 2008. Lenders also are easing standards for auto loans to expand the pool of buyers and drum up more business. That has put car sales on track for the best pace since 2007, helping companies including General Motors Co., Ford Motor Co. and parts maker Lear Corp. to report better-than-estimated earnings. Read more.