On Nov 6, 2007, at 9:28 PM, Robert Wrubel wrote:
> I don't suppose there are any numbers to support that
> oft-repeated claim -- say, total amount of new equity
> lines last year as a percent of total sales of goods
> and services?
Well yeah. There are some numbers. Fed economist James Kennedy has been updating estimates of mortgage equity withdrawal (MEW) that he first did in partnership with a guy named Alan Greenspan in a 2005 paper, latest version at:
<http://www.federalreserve.gov/PUBS/feds/2007/200720/200720pap.pdf>.
They/he estimate(s) that MEW proceeds devoted to spending equaled about 2% of total personal consumption from 2002-2005, and about 92% of house improvement expenditures (which aren't consumption, but residential investment). They also equaled about a third of the growth in consumption from 2002-2005. Those numbers haven't come down all that much actually, so we haven't felt the full effects of the housing bust on consumption yet.
Doug