5 odd signs the economy is heating up

The recession that ran from 2007 to 2009 seemed to be good for family cohesion: The divorce rate hit a 40-year low, lots of grown kids moved back in with their parents, and the proportion of people leaving their home town for greener pastures sank to the lowest level since the idyllic 1950s.

The family cohesion, of course, was largely an illusion. What really happened was that people put off big decisions that might have hurt their budgets, no matter how much teeth-gritting it required. The economy is still iffy, as new Fed chair Janet Yellen indicated in recent Congressional testimony, pointing out that jobs are still somewhat scarce and consumer spending hesitant. And the latest data shows the economy grew more slowly at the end of 2013 than previously thought.

Yet more Americans are now making the tough decisions they put off a few years ago, which might look like bad news but actually shows people are feeling more confident about taking risks, busting a career move or going it alone. Here are five offbeat indicators of a growing economy:

A rising divorce rate. Financial stress worsens marital tension, yet the divorce rate dropped in 2008 and 2009, just as the recession intensified. That’s not surprising, since thousands of estranged spouses couldn’t bear the costs that come with splitting one household into two (not to mention the lawyers). Plus, the housing bust meant divorcing couples who owned a home had a tough time selling this big marital asset without taking a loss, adding to the burden of divorce. When the unemployment rate began to drop in 2010, however, the divorce rate began to inch back up, with 2.4 million Americans getting divorced in 2012, according to Bloomberg. Divorce can be a big financial setback for individuals — especially working women — but the fact that it’s becoming more frequent means more people have the financial resources to start over.

More people quitting their jobs. Before the recession, about 2.1% of workers voluntarily left their jobs every month to take a different job or try something new. But during the recession, the quit rate, as it’s known, fell to 1.2%. That reflected plunging job security and a lack of jobs overall,  typical in a recession. The quit rate has been rising since late 2009 and it’s now at 1.7%, or about halfway back to normal. A rising quit rate shows more people feel comfortable leaving a safe but undesirable job for one they hope offers better opportunity — the kind of risk-taking that helps keep the economy vibrant.

More subprime lending. Wells Fargo garnered some disapproving headlines recently because it has begun granting subprime mortgages again. But this is exactly what’s supposed to happen in an economy built on credit. There’s nothing inherently wrong with making loans to consumers with subpar credit scores — as long as the risks are well understood and interest rates are adjusted upward to account for the elevated risk of default. The reason subprime loans were so disastrous during the housing bust that began in 2006 is that loan underwriters completely disregarded established standards, approving mortgages for many borrowers who lacked the income to finance what they bought. When economists call on banks to ease lending standards in order to stimulate home buying and the broader economy, what they mean is extending more loans to people who are a higher credit risk. When done properly, that signals a return to normal lending standards, which is good for the economy.