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High consumer sentiment may indicate increased borrowing to come

Jun 10, 2013 Philip Burgess

An optimistic outlook among consumers may indicate that borrowing rates could increase across the country as Americans should be willing to spend and invest more.

Overall, the Thomson Reuters/University of Michigan's consumer sentiment index hit 84.5 points in May, the highest mark reported by the source since July 2007. The post-recession high was a surprise to many experts, as the source noted that the index was expected to reach just 83.7.

Buyers are feeling optimistic about current economic conditions as well, as the source marked that particular index at 98 units for May. That was an increase from the 89.9 point measurement reported in April. It's yet another post-recession record being the highest mark seen since August 2007 mark.

These developments could lead to an increase in short term lending and other credit activity, as consumers appear to be placing more faith in the state of the economy. In fact, trends so far this year indicate that individuals are borrowing more.

Data recently released from The Federal Reserve showed that overall credit spiked by 5.7 percent during the first quarter of 2013. With borrowing trends on the rise, lenders will be looking to take advantage of the positive development.