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Chart of the Week: GDP w/o Mortgage Equity Withdrawal

Posted By Barry Ritholtz On December 13, 2005 @ 12:24 pm In Economy,Real Estate | Comments Disabled

Calculated Risk [1] 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:
>

GDP w/ and w/o MEW (10 Years)
Gdp_w_and_wo_mew_2 [2]

Source: Calculated Risk [1]

>

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 [3].

 

>

Random Items: [4]

Housing Bears Bet on Shaky Credit [4]

Recession looming, some fear [5]

Let Your PC Do the Investing [6]

Does the Market Know How to Price Al-Qaeda? [7]

Delicious, Digg, and the New Balance of Power [8]

Google: Ten Golden Rules [9]

THE GOOGLEVERSE [10]

>

Quote of the Day:

The Stock market is that creation of Man which humbles him the most

~Anonymous


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2005/12/chart-of-the-week-gdp-wo-mortgage-equity-withdrawal/

URLs in this post:

[1] Calculated Risk: http://calculatedrisk.blogspot.com/2005/12/gdp-growth-with-and-without-mortgage.html

[2] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/gdp_w_and_wo_mew_2.jpg

[3] Households – Another Quarter Older And Deeper In Debt: http://www.northerntrust.com/library/econ_research/daily/us/dd121205.pdf

[4] : http://online.wsj.com/article/SB113434924242819801.html

[5] Recession looming, some fear: http://www.kansascity.com/mld/kansascity/13386391.htm

[6] Let Your PC Do the Investing: http://www.wired.com/news/business/0,1367,69710,00.html

[7] Does the Market Know How to Price Al-Qaeda?: http://www.bloomberg.com/apps/news?pid=10000039&sid=aD5fopgVFN2s&refer=columnist_lewis

[8] Delicious, Digg, and the New Balance of Power: http://www.aventureforth.com/2005/12/06/delicious-digg-and-the-new-balance-of-power/

[9] Google: Ten Golden Rules: http://www.msnbc.msn.com/id/10296177/site/newsweek/

[10] THE GOOGLEVERSE: http://www.siliconvalley.com/mld/siliconvalley/13233755.htm

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