Current conditions favor increased consumer spending

The recent government shutdown hurt consumer confidence, but current conditions could lead to an increase in spending in the near future. As a result, short term lending demand might rise, as people put themselves in a position for financial troubles by emptying their bank accounts.

For example, if an unexpected expense arises following a major purchase, consumers could fall short on other essential expenses. But, a short term loan can help people avoid such a situation by providing funds quickly to cover payments.

Short term lending could prove beneficial to many consumers who face financial troubles, as late fees and penalties for missing a credit card or utility payment can be costly.

Home price appreciation expected to continue through 2018
With strong appreciation, Americans may see a boost to household wealth, putting them in a better position to increase spending. Values are expected to end 2013 up by an average of 6.7 percent on a year-over-year basis, according to the latest Zillow Home Price Expectations Survey.

In the future, gains are expected to fall to a more sustainable rate, with a 4.3 percent rate projected for 2014 and 3.4 percent rate in 2018. If projections are correct, the May 2007 peak could be breached in the first quarter of 2018.

"The housing market has seen a period of unsustainable, breakneck appreciation, and some cooling off is both welcome and expected," said Zillow Chief Economist Dr. Stan Humphries. "Rising mortgage rates, diminished investor demand and slowly rising inventory will all contribute to the slowdown of appreciation."

U.S. companies laying off fewer employees
The employment situation is improving, which could lead to a bump in spending, as consumers have stronger job security. Initial jobless claims decreased by 9,000 applications to 336,000 in the week ending Nov. 2, according to the U.S. Department of Labor.

Further job creation is still needed, but the drop in first-time applications for unemployment benefits is a positive sign.

"We're still seeing a very low trend of job destruction, but this is just one side of the equation," Scott Brown, chief economist at Raymond James & Associates Inc, told Bloomberg. "The big issue for the job market over the last couple years has not been job losses, it's really been an issue of job creation, and that's what we're waiting for."

The U.S. economy added 130,000 positions in October, down from 145,000 in September, according to the ADP National Employment Report. The government shutdown likely contributed to the decline, but the recent drop in initial jobless claims shows stronger growth could be on the way in November and beyond.

Pace of economic growth accelerates in Q3
The economic recovery continued in the three-month period ending in September, potentially increase consumer confidence and, in turn, spending. According to the U.S. Department of Commerce, GDP increased at an annualized rate of 2.8 percent in the third quarter, up from 2.5 percent in the previous three months.

A large jump in inventories contributed to the boost, but experts said sales need to remain strong in the fourth quarter for growth to continue, which is possible with the potential for a pick up in spending during the holiday season.

"You've got this big jump in inventories, and that's clearly in excess of what the flow of spending is," John Silva, chief economist at Wells Fargo Securities LLC, told Bloomberg. "If you stockpile all this inventory but your sales don't really change all that much, then what you're going to do in the next quarter is cut back."