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Improving employment situation could spark more spending and borrowing

Jul 25, 2013 Quinn Thomas

As the jobs market continues to improve, consumers are likely to feel better about their personal financial situations. As a result, spending and borrowing activity might pick up, which could lead to heightened demand for short term lending.

Initial jobless claims declined by 24,000 to 334,000 in the week ending July 13, according to the U.S. Department of Labor. This drop exceeded expectations, as economists surveyed by Bloomberg projected 345,000 applications.

"The labor markets are healing, as companies see further demand for their goods and services, there is certainly less risk for job loss," Russell Price, senior economist at Ameriprise Financial, told Bloomberg. "Claims are certainly indicative of an improving job market, but not a particularly robust one."

The slowdown in firing is a positive sign for the economy in the United States, but in order to maintain this momentum, layoffs need to continue to trend downward. Should that be the case, income growth could follow, which might help boost household spending.

With the potential for more borrowing and spending activity, short term lenders should prepare for additional applications for loans.