Housing wealth has a more immediate impact on consumer spending than stock wealth and has sustained the U.S. economy since the beginning of this decade, according to a new study produced by the Joint Center for Housing Studies of Harvard University and Macroeconomic Advisers LCC, and commissioned by the National Association of Realtors. David Lereah, NAR's chief economist, said the study, "Housing Wealth Effects," shows a large difference between the impact of housing wealth and stock wealth on consumer spending, particularly during the last economic downturn. "Aggressive cuts in short-term interest rates at the beginning of the decade forestalled economic problems and led to record home sales and home equity borrowing," Lereah said. "Without the stimulus, housing's contribution to consumer spending would have been about half as great, the recession much worse and the recovery less robust." A major finding in the study is that over time, consumers spend about five-and-a-half cents ou...
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