Glimmers of hope for beaten down consumers

(MoneyWatch) Americans are growing more confident in the U.S. economy, but want better job security and easier access to credit, according to some financial experts.

Speaking at a recent panel discussion on the state of the economy in Nashville, Tenn., mortgage and credit experts said consumers are beginning to express more optimism about their personal finances and about the state of the housing market. Greg McBride, a senior analyst with consumer finance research firm, said people are showing greater interest in credit products, even as economic growth has slowed.

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When it comes to buying and owning a home, Churchill Mortgage, a Nashville mortgage brokerage, wanted to gauge whether consumers who purchased homes after the housing crash were still satisfied with their purchase. They polled people who bought homes in 2008 and 2009 in 23 states. Eighty-six percent said they were glad they bought their home, and 83 percent said they still consider homeownership a vital part of the American Dream. They would also recommend buying a home to other prospective buyers.

Doug Walker, vice president of Churchill Mortgage, said that while he has seen pent-up demand for homes continue to build following the crash, he has also seen some longtime renters buy a home.

We're "getting a little bit more confidence around the situation internationally, particularly in Europe, and if that can be the case I think you'll see consumer confidence starting to come back up, and I think that's gotta be the ticket out" of the recession-like feel of the economy, said Trey Loughran, president of personal information systems at Atlanta credit bureau Equifax.

The panelists also asserted that it is individual consumers, rather than the government and the private sector, that will have to lead the recovery. That, in turn, will require people to feel more secure in their jobs and to see some wage growth, which has been largely flat for most Americans for years. "Income growth is really key at this point," McBride said. "People have the willingness to spend, but they just don't have a whole lot of capacity because their incomes have been flat."

The pace of recovery is also closely tied to the credit environment in the U.S. Unemployment eats away at savings and keeps people from paying their bills. People couldn't pay their mortgages, so homes turned into foreclosures. Consumer and student debt continues to hinder American financial security.

On that score, at least, there is some good news on the horizon. According to the latest credit data from Equifax, Americans are carrying less debt than they were a few years ago and more credit is being issued, particularly in the world of auto loans. Total consumer debt is down 11.3 percent, or $1.4 trillion dollars, compared to its peak in October 2008. Deleveraging is giving some Americans more runway to spend.

If lenders are issuing more credit, it's still hard to obtain, Loughran said. Growing markets for lenders include the "unbanked," or people who have no credit, and Hispanics. The unbanked represent $1.5 trillion in untapped funds and Hispanics represent about $1.2 trillion.

Steve Ely, CEO of alternative credit-reporting agency eCredable, helps unbanked consumers prove they are creditworthy by reporting the bills they pay that don't show up on traditional credit reports. He said lenders would generate $45 billion in interest alone if such customers were able to get credit.

"We know that would stimulate the economy," he said. "If financial organizations would leverage this information and use it to make credit decisions, they would help consumers gain access to mainstream financial products."

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    Ilyce R. Glink is an award-winning, nationally-syndicated columnist, best-selling book author and founder of Best Money Moves, an employee benefit program that helps reduce financial stress. She also owns, where readers can find real estate and personal finance resources.