Atif Mian and Amir Sufi

Subprime Lending Drives Spending

A concern that we highlighted in yesterday’s post is that the only way the U.S. economy can generate significant consumer spending is through aggressive lending to borrowers with low credit scores. Here is more evidence supporting that view. In the chart below, we plot retail spending on appliances, furniture, and home improvement, or “home-related spending” (blue line) …

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