US economy continues to show signs of strength, potentially signaling increased borrowing activity
Jul 03, 2013 Quinn Thomas
With the economy beginning to show signs of improvement, consumers might feel more confident in their personal financial situations.
As Americans feel better about their finances, credit and short term lending activity could pick up as a result.
One recent sign that the economy is picking up steam is the bump in the Conference Board Leading Economic Index. The LEI was up 0.1 percent in May to 95.2, after increasing 0.8 percent in April.
"Despite month-to-month volatility, the LEI's six-month growth rate remains steady, suggesting that conditions in the economy remain resilient," said Ataman Ozyildirim, economist at The Conference Board. "Widespread gains in the leading indicators over the last six months suggest there is some upside potential for economic activity in the second half of the year."
Ken Goldstein, another economist at The Conference Board, said further economic growth is contingent on the recovery in the housing market.
It appears as though housing could continue to boost economic growth, as Zillow revealed home value appreciation exceeded 5 percent once again in May. The Zillow Home Value Index hit $159,000, 0.5 percent higher than April, a 5.4 percent improvement from a year ago.
Appreciation is expected to ease a bit in the next year, but will still remain high enough to help boost consumer confidence. Between May 2013 and May 2014, values are projected to rise 4.1 percent.
More than half of the 360 metros studied showed monthly home value appreciation, with Sacramento leading the way, followed by Las Vegas and Los Angeles.
As the economy gains momentum, short term lenders should prepare for increased demand. A better economy typically leads to further consumer spending, which, in turn, could signal additional credit and borrowing activity.