When Home Values Suffer, Household Spending Does Too

Perhaps unsurprisingly, there are correlations between how much Americans' homes are worth, their overall wealth, and how they spend their money, and these links go a long way in explaining why a crisis in the housing market can so quickly spiral out of control. A sudden dip in home values can leave homeowners feeling poorer and more economically fragile, causing them to reduce their spending in many different ways. When that happens en masse in a country where consumer spending represents nearly 70 percent of GDP , it can be catastrophic for the national economy. But as straightforward as......(read more)

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