Why should the housing wealth effect be larger everywhere than it is for stockmarkets?
It's called the wealth effect: People spend more when they think they're worth more.
As construction comes back, so will the jobs which in turn create a wealth effect.
House prices have a far bigger wealth effect on consumer spending than share prices do.
Mr Poterba reckons the lower estimates of the wealth effect during the 1990s are more plausible.
The wealth effect explains the buoyancy of retail sales, homebuilding and the high plateau of auto volume.
So far, surprisingly little evidence exists that America's bull market has created much of a wealth effect.
Maybe we can collect some good anecdotal data about whether the shrinking wealth effect will lead us into recession.
Greenspan is worried about the inflationary implications of the wealth effect, but the country doesn't want to hear it.
Private consumption is picking up and will continue as the wealth effect of a stock-market bull run kicks in.
With Wall Street wobbling for much of this year, the wealth effect from share prices may be weakening too.
The other main mechanism through which falling equity prices affect the real economy is the wealth effect on consumers.
If we are going to succumb to the wealth effect, though, let's at least measure wealth in a sober fashion.
Baird, of Plante Moran, has a different view, attributing the improvement to the wealth effect, which Bernanke has actively pursued.
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If the U.S. stock markets flirt with their alltime highs sometime before the election a wealth effect will kick in.
The Fed's bet is that the wealth effect will trigger a virtuous cycle of confidence, investment and faster future growth.
There is also a wealth effect whereby home-owners feel richer, and spend more, as the value of their homes increase.
On the one hand the Federal Reserve wants to boost stock prices to create a wealth effect that boosts the economy.
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First, house prices have a bigger wealth effect on consumer spending, largely because more people own their homes than own shares.
In the short run, the danger is that the wealth effect from housing may follow the equity wealth effect by turning negative.
In general they stimulate in year 3 to create a wealth effect in year four and it works and everyone is happy.
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So withdrawing and consuming them will have a greater negative wealth effect.
House price weakness helps the buyer, who is usually less wealthy than the seller, one of several factors muting the negative wealth effect.
Anecdotal evidence supports the thesis that he wealth effect caused by a rising market is encouraging consumers to spend during this holiday season.
Moreover, financial assets now account for a larger share of household wealth, making the wealth effect of a stockmarket crash potentially much larger.
He added that the slowdown in the housing sector looks to reduce the so-called "wealth effect" on consumers, leading to a slowdown in spending.
Rising stock prices have the potential to stimulate household spending due to the wealth effect, and that could raise the likelihood of economic recovery.
Optimists add that, so far, the wealth effect, under which consumers rein in spending in response to sliding share prices, has been remarkably modest.
Any rise in home prices could still increase consumption, even if it does so by removing credit constraints rather than through the wealth effect.
The wealth effect, aided by rising stock, bond, and home prices from the March 2009 lows provide further salve for the wounds of the past.
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