We've heard for a while about how the economy is improving – home prices are slowly rising and consumer spending, even with the recent tax cuts, has been increasing. But now the numbers are showing even more evidence that a recovery is underway. After news that the unemployment rate fell to the lowest level since the 2008 crisis, Bloomberg Businessweek reported this week that unemployment benefits have also fallen to the lowest level in two months.
In the first week of March, jobless claims fell by 10,000 – the lowest since mid-January this year, and a five year low in the average of four week employment data.
This was an unexpected increase, the article said. Though a payroll tax increase caused paycheck cuts, consumer spending has, somewhat surprisingly, remained the same. This allows employers to keep holiday workers as profits remain steady, which is expecting to help continue the cycle.
However, many economists are still warning against the future effects of this tax increase, as well as budget cuts from the sequestration, and the effects these could have on the future economy. Even with the recovery, many industries have already or will soon be seeing, their funding take a hit.
For banks and lending institutions, both of these point to the need to be cautious. While the improved employment rate can likely cause an increase in mortgage and other loan applications, creating a need for loan management software, the potential effects from the sequestration and budget cuts could also keep future borrowers from being able to repay loans. For banks, investing in risk management software can help determine customers' qualifications. With more information, lenders can make the best decisions regarding borrowers and remain solvent, regardless of how quickly the economy recovers.