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Strategies & Market Trends : MDA - Market Direction Analysis

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Nov 14 4:00 PM EST

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To: A.L. Reagan who wrote (70363)	2/24/2001 4:25:02 PM
From: JRI	Read Replies (1) of 99985

AL- Thanks for your perspective. What's your take on the wealth effect, and its tie to home equity and home prices? Have heard in a couple places that increases in home equity often drive consumer spending more than stock portfolio gains (I suppose the logic being that, I believe, the absolute number of people who have a majority of net worth in their homes vs. stock market.....I'm not talking the absolute $ amount, just the absolute amount of people).. Anyway, what's your take on how this could effect economy going forward, and its what time frame, and....even if it is a minimal effect by your forecasts....piled on top of lower equity portfolio, greater unemployment, and rising consumer debt, could it be the straw that broke the consumer's back? (I don't know what the combined impact from all these factors are, but I wouldn't expect a strict linear relationship between those and consumer spending habits....I would think there is a "enough's enough" point, and rapid graph change)

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