>But you were just saying that debt has risen because people are
>borrowing against the value of their stock. That debt represents
>consumption, doesn't it? So how can there not be a "wealth effect" that
>shows up as higher consumption?
I was responding to Jordan's example. How common it is no one really knows. The record for a strong stock market influence on consumption (or investment) is mixed at best - mostly because stock ownership is so concentrated. Things may be different in this cycle because the market has risen so dramatically, and because more people are involved than before - but Poterba & Samwick (Brookings Papers, 1995) were unable to find a strong influence even on luxury consumption.
Doug