It’s starting to feel as if the good times have returned at Diamond Jim’s Motor Cars, with its sales of used cars up at least 30% this summer from the same period last year.
“We’re doing well, we’re having fun,” said Tom Letizia, the owner of Diamond Jim’s, which operates automotive lots in Greenfield, Milwaukee and West Allis. “We made it through the ’08, ’09, 2010 drought, and it’s now getting back to the glory days like it used to be. People are buying cars, people are spending money.”
A lot of it is borrowed money.
The Federal Reserve reported last week that consumer borrowing in the United States is at a record level of $3.47 trillion, driven by auto and student loans and an uptick in credit card use.
A national summer wave of borrowing started in June when credit jumped by $27.2 billion — the largest monthly increase since November 2001. Although borrowing rose at a slower clip in July, at $18.9 billion, and in August, at $16 billion, it was a solid summer lending season.
Generally, economists are forecasting that consumer spending, which accounts for 70% of economic activity in the U.S., will remain strong in the coming months as households are willing to take on more debt.
Wisconsin lenders, including the largest state-based bank and credit union — Associated Bank and Landmark Credit Union — have felt the increase in consumer borrowing.
“When we look at auto loans from the first to second quarter, we’re up about 74% in funded dollars,” said John Halechko, executive vice president and director of branch banking for Green Bay-based Associated.
From the first to second quarter this year, funding of home equity lines of credit was up 31% at Associated Bank, Halechko said.
“People who have lines with us — lines of credit that they might have had for two or three years that they didn’t do anything with — now we’re seeing an uptick in line utilization as well,” Halechko said. “So it’s not just new lines we put on the books, but also lines that have been around. People are saying, ‘You know what, money is not going to get cheaper, so let’s take advantage of that.'”