ELLIOT: Does the new 700 Club have enough faith to juice the economy?

With tax and health care reform, Washington can turbocharge the effect of millions of newly creditworthy consumers returning to the market.

Economists have wondered for years what has kept American consumers’ cash in their wallets long after the recession ended. Were consumers, bitten by the recession, twice shy about making major moves such as “trading up” for a new house, or buying a vacation home or boat? Was this the new normal, where boats and play homes didn’t fit in and renting was king? Were too many caring for multiple generations at home?One explanation for the lag, a metric that has mostly escaped notice, is also one whose end may foretell an economic breakout. More than 6 million Americans will have major detrimental information fall off their credit reports in the next five years, according to Barclays. Many of these consumers have been back on their financial feet for years, but have been living a cash-based existence since foreclosures and personal bankruptcies destroyed their ability to get credit.But with the hangover from the painful financial missteps gone, or soon to be so, many are planning a return to credit purchases such as moving from renting to owning a home again. As the Wall Street Journal reported this week, Americans’ credit scores hit a record high in April. Up from 699 in the fall, the average score of 700 is the highest since Fair Isaac began tracking the data in 2005. Additionally, the percentage of consumers with the worst scores hit a record low.Turning to North Carolina, the state’s creditworthiness hasn’t looked so stable in a long time, at least when measured by foreclosure filings. The first four months of 2017 have seen an average of 2,133 filings in the state, the best figure since 2000, when the monthly average was 1,715. After the recession officially ended in mid-2009, monthly average foreclosure filings per calendar year hit a peak in 2010, with 5,523, and have been falling steadily since then.Post-recession, North Carolina’s experience mirrors the national trends. But the Tarheel State’s housing problems didn’t begin with the 2008-2009 recession, they began with the onset of the brief post-9/11 recession. Foreclosures doubled from 1998 to 2002, then nearly doubled again by 2008, just before the beginning of the recession that will always be associated with the bottom falling out of the housing market. That is much different than the nationwide numbers, where annual filings remained steady from 2001 until the final months of 2006, then shot up from there to the 2010 peak.So as the passage of the seventh year causes the glut of foreclosures to roll off credit reports, the continuing low interest rates and economic growth (however sluggish) should allow more consumers to get back into the market for major purchases. It may be a car, boat, or vacation home — but for the new 700 Club, it also may simply be a return to homeownership. Many families have been forced to rent homes since foreclosure or bankruptcy sent their credit scores plummeting.If Republicans in Congress and the Trump administration can ever get down to business and pass the economy-boosting tax and healthcare reform they were elected to achieve, the promise of more consumer cash in the economy will turbocharge the effect of millions of newly creditworthy consumers with stable finances returning to the market ready to borrow and buy.To be sure, a return to usage of consumer credit does not need to be a return to “liar loans” and running up endless credit card debt. The experience of foreclosure and bankruptcy for the 700 Club — and for the lenders too — will have made them much more circumspect about piling on debt and using home equity as a piggy bank for frivolities. There is ample evidence that homeownership levels may be depressed for decades as more ponder the benefits of renting over owning.To be sure, a return to usage of consumer credit does not need to be a return to “liar loans” and running up endless credit card debt. The experience of foreclosure and bankruptcy for the 700 Club — and for the lenders too — will have made them much more circumspect about piling on debt and draining assets. No one still believes that real estate values always increase. Not anymore.Consumers who have been burned are more likely to weigh factors beyond their current paycheck before they make that large purchase again. Unfortunately, the gridlock in one-party Washington is sending the worst signals possible, and people are noticing. The May update to N.C. State University economist Michael Walden’s leading indicator index for North Carolina posted its first year-over-year decline since December 2015. Walden explained that the drop is not concerning yet, but “as the nation continues to struggle with modest growth, and as the Trump administration economic stimulus plans are currently stalled, both private and public decision-makers should approach the future with caution.”The economy needs a breakout, and the newly creditworthy are able and ready to provide it. If the politicians can do the jobs they were elected to do, the entire nation will benefit. Drew Elliot is a member of the North State Journal’s editorial board, separate from the news staff. Unlike other newspapers, the North State Journal does not publish unsigned editorials; the author or authors of every editorial, letter, op-ed, and column is prominently displayed. To submit a letter or op-ed, see our submission guidelines.