After years of work by the government and Federal Reserve, positive news was announced by the U.S. Department of Labor this week – the unemployment rate has hit a four year low. In February of 2013, a total of 236,000 jobs were added to the economy, bringing the unemployment rate down to 7.7 percent. Compared to January of this year, this is a decrease of two-tenths of a percentage point, or 7.9 percent.
While the unemployment rate remains higher than the Federal Reserve's goal of 6.5 percent, the annual rate of job increases is larger than any one month of last year. In 2012, an average 183,000 jobs were added each month. This number did improve over the course of the year, and in December, 219,000 jobs were added.
Again, while not particularly close to the unemployment rate before the crisis, this does suggest the economic recovery is headed in a positive direction. And as confidence grows among consumers, the momentum is expected to follow.
For banks, this can mean not just potential customers, but with more confidence, more loan applications as well. As more Americans are able to hold down jobs, car applications often rise, since many will now require a car to get to work as well as make car payments.
To prepare for these changes, banks and other financial institutions that have seen a decline in lending after the crisis can invest in application processing software to prepare for the rise in applications. Furthermore, risk management tools can also help lenders determine qualifications of borrowers in efficient ways, ensuring that the lending that took place prior to the crisis doesn't happen again, which would likely hurt both lenders and borrowers in the process.