Calculated Risk notes that Mortgage Equity Withdrawal (MEW), was $171 Billion in
Q3 2005, out of total household mortgage
increases of $289.5 Billion dollars.
Goldman Sach’s estimates ~2/3 of MEW is flowing through
to personal consumption. Using their numbers, we can estimate the impact of
Mortgage Equity Withdrawal on GDP:
Source: Calculated Risk
Its readily apparent from the graph how crucial MEW has been
to GDP spending. If MEW falls significantly, it will be a major drag on GDP:
Expect personal consumption to slow, impacting retail. The Real Estate Complex
will also see job creation fade.
See also Northern Trust’s Paul L. Kasriel Households – Another Quarter Older And Deeper In Debt.
Quote of the Day:
The Stock market is that creation of Man which humbles him the most
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.