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Improved economic confidence could boost borrowing

Jul 29, 2013 Quinn Thomas

While the economy has shown some signs of slowing down in the past month, Americans are still much more confident than they were at the beginning of the year. As a result, borrowing activity could pick up, which might translate into increased demand for short term lenders.

Gallup's U.S. Economic Confidence Index stood at -12 in the week ending July 21. This was unchanged from the previous seven-day period but was nearly 10 points higher than the -21 reading seen in January.

Part of the reason economic confidence has pushed through some headwinds is the fact that the employment situation has been improving.

June was another solid month for the jobs market, with gains higher than expected, and two economists at the Federal Reserve Bank of Kansas City recently said the economy is on track to be back to normal by summer of 2015 in terms of jobs, Bloomberg noted.

With the economy and employment situation improving, Americans might find themselves with more household wealth, which, in turn, could lead to higher spending levels. Oftentimes, when consumer expenditures rise, borrowing activity follows suit, which could lead to more requests for short term lending.