Personal loans are 'growing like a weed,' a potential warning sign for the U.S. economy

[IronLionZion]

https://www.washingtonpost.com/business/2019/11/21/personal-loans-are-growing-like-weed-potential-warning-sign-us-economy/?utm_campaign=first_reads&utm_medium=Email&utm_source=Newsletter&wpisrc=nl_rainbow&wpmm=1

More than 20 million Americans have taken out these loans, and the average balance is over $16,000



Americans are hungry for personal loans that they can use as quick cash to pay for anything from vacations to credit card debt, a potential red flag for the economy.

Personal loans are up more than 10 percent from a year ago, according to data from Equifax, a rapid pace of growth that has not been seen on a sustained basis since shortly before the Great Recession. All three of the major consumer credit agencies — Equifax, Experian and TransUnion — report double-digit growth in this market in recent months.

Experts are surprised to see millions of Americans taking on so much personal loan debt at a time when the economy looks healthy and paychecks are growing for many workers, raising questions about why so many people are seeking an extra infusion of cash.

“Definitely yellow flares should be starting to go off,” said Mark Zandi, chief economist at Moody’s Analytics, which monitors consumer credit. “There’s an old adage in banking: If it’s growing like a weed, it probably is a weed.”

Personal loans propping up consumer spending. Fed stimulus propping up the commercial lending and stock markets. This whole economy is being propped up like a house of cards.

[onethatcares]

1. 16.4%

is a number I've seen in emails to my self. furgaudsake, how do you pay off a loan at that rate? I have a 780 credit score.

[virgogal]

2. Most of the main players cap the

interest rate at 36%............I had to read that several times,astonishing.

[lunatica]

3. That borrowing doesn't seem like confidence to me.

It smacks of desperate hope. Of trying to shore up a financial foundation they can rely on.

Like buying a house for the equity you know you’ll need in the future. Or borrowing to fix something up in your house because you know you’ll have to sell to downsize into something smaller and cheaper that you can afford.

Or like paying off debts and trying to consolidate them.

I predict a spike in bankruptcy filings in the future by these same borrowers. It’s probably already in their long term plans.