Getting Schooled in Credit

Consumer credit and spending are increasing, which is important because consumer spending is the driver of economic activity -- everything else in the economy follows it, including capital investments and job creation. Expanding consumption is the first sign that a virtuous cycle of activity has begun, and expanding consumption may be signaling an increase in consumer credit. Consumers typically increase their use of credit for consumption purchases when they are confident that they will have enough income to service the new debt.

The two largest consumer sales predicated on credit are for autos and homes. Although confidence in the housing market is still shaky and hasn't performed in line with indications that the economy is expanding, autos sales have. Aggregate consumer credit has increased at about a 10% annualized rate over the past few months and much of it is attributed to new car sales, which have risen since last summer because credit availability has loosened....465 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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