Spending projection may show consumers want to borrow
Jun 10, 2013 Philip Burgess
Short term lenders and other loan providers across the country may see increased activity in the coming year. A new report from the National Association for Business Economics (NABE) found that industry experts expect a year of financial recovery and a growth in consumer spending.
According to the organization's survey of 49 economic forecasters, consumer spending is predicted to pick up by 2.3 percent this year. In 2014, an increase of 2.6 percent is expected. Despite federal spending cuts, overall GDP numbers are marked for a jump as well, which could possibly indicate a robust and stable economy.
"NABE panelists estimate 2.4 percent growth in real GDP from the fourth quarter of 2012 to the fourth quarter of 2013 and suggest an improvement in real GDP growth to 3 percent in 2014," said Dr. Nayantara Hensel, chair of the NABE Outlook Survey.
The rate of growth is accelerating, as the source noted consumer expenses went up just 1.9 percent last year. Some of the contributing factors in the expected boom in spending are likely increases in light vehicle sales and industrial production. Both of these developments could contribute to a spike in auto loans, mortgage financing and investments in startups looking for office space.
Some have suggested that the positive economic indicators may be misleading. Fox News reported that despite positive GDP projections from the Commerce Department, the United States may still face financial challenges that the source speculated may curb consumer purchasing.
However, other sources, including Experian, believe the economic atmosphere is ripe for development, even given negative measurements. The source recently reported that auto loan delinquencies increased but noted rates were still much lower than recession-level norms. Also, it stated a return to subprime lending has naturally led to a slight jump in late payments.
For short term lenders and other financial institutions, the signs are mixed. However, continuing positive trends in consumer spending behavior can only be advantageous for loan providers.