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Auto Loans and Credit Card Borrowing Hits Records

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EDITOR NOTE: As the pandemic’s surge decelerates against a backdrop of mass vaccinations, America’s appetite for debt and splurging is once again on the rise. Car loans, restaurant spending, and vacations are rising as Americans’ pent-up demand for travel and social gatherings finds its objects of indulgence. Taking a step back, we remind ourselves that a flourishing economy finds itself amid an abundance of production and capital growth. That’s saving, investing, and producing. Perhaps that best describes banks, lenders, and the productive end of Main Street. As for the benefit to consumers, it really depends on the outcome of their “consumption,” doesn’t it? With millions of American households historically short on savings, low on investments, and high on debt, we get a picture of pure consumption without production. Very fitting for the term “consumer.” A cog in the wheel of the Fed’s economic machine? While many Americans suspect the Fed of engineering the wealth gap that divides this country--which may be right “on the money”, so to speak--perhaps one ought to first think in what way these same Americans may be aiding the central bank in its nefarious agenda.

In a sharp reversal from the depths of the pandemic, Americans are more willing to take on debt

Americans are borrowing again, in some cases at levels not seen in more than a decade.

Consumer demand for auto loans and leases, general-purpose credit cards and personal loans was up 39% in April compared with the same period last year, according to credit-reporting firm Equifax Inc. It was also up 11% compared with April 2019, according to Equifax, which measured how often lenders checked consumers’ credit reports to make loan decisions.

Lenders are meeting the moment. Equifax said lenders extended a record number of auto loans and leases in March, the latest month for which data are available. They also bumped up credit-card originations, issuing more general-purpose credit cards than any other March on record. Equifax’s data goes back to 2010.

It is quite the reversal from 2020, when many people shunned credit cards, personal loans and other types of debt. Some didn’t need to borrow because stimulus checks, expanded unemployment benefits and a surging stock market padded their checking accounts. But many didn’t want to spend money when they were worried about getting laid off, and others, stuck at home, had nothing to buy.

But with vaccinations readily available in the U.S. and the economy reopening, many Americans are newly confident in the economy after hunkering down last year. They are splurging on cars, vacations and eating out. Higher prices, especially for cars and trucks, have also stoked loan demand.

Original post from The Wall Street Journal

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