The Calculated Risk blog has published a graph featuring data on the dramatic plunge in home mortgage equity withdrawals. It encapsulates not only what has happened to housing prices but what’s happened to domestic consumption: At the height of the housing boom, the practice of drawing down cash from ever-escalating house values accounted for about 6 percent of U.S. consumer spending.
More at CalcRisk.
> At the height of the housing boom, the practice of drawing down cash from ever-escalating house values accounted for about 6 percent of U.S. consumer spending.
Yes, I know – I reported this back in January. What you didn’t get around to is the fact that this stimulus has been applied to our economy and yet we were barely holding a positive GDP growth through the 2000s. In fact, GDP growth less federal deficits has been negative since 2001. Take away the home equity withdrawals and it looks as though the Depression really started in 2004-5
You haven’t commented on what that means to the economy from 2001-2008, or what it means from 2008 on as we spend Trillions of Dollars to reflate.