Our latest chart comes courtesy of Michael Panzner, author of "The New Laws of the Stock Market Jungle

click for larger graphic:

Panzner observes:

"Reports suggest many U.S. consumers have tapped the equity in their homes to
finance their spendthrift ways in recent years. That relationship seems apparent when one looks at the ratio of U.S. personal consumption expenditures to personal income and compares it to the Mortage Bankers Association refinancing index (see attached).

However, the recent drop-off in the spending-income ratio to levels last seen nearly four years ago, amid an overall slowdown in refinancing activity (which is at least partly attributable to Federal Reserve tightening and higher short-term interest rates), suggests that overstretched homeowners’ cupboards may be getting bare.

Is this a sign of trouble to come for consumer spending — and the economy at large?"

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