Hi OMD,
From your article...
>>Paddy Jilek, director of U.S. economics at Credit Suisse First Boston, said consumers will spend less and save more to rebuild eroded wealth, and that could "take quite a while to work through."
Jan Hatzius, senior economist at Goldman Sachs, said that without a stock rebound, the economy faces the "biggest pent-up negative wealth effect that you can see in the economic data going back to 1952."
The drop in net worth, including a minor amount attributable to nonprofit organizations, was almost entirely because of plunging stock values. The value of direct household stock holdings sank to $6.6 trillion from $8.75 trillion, and the value of household mutual-fund holdings declined to $3 trillion from $3.1 trillion, though some of that could be due to sale of stock, not just falling stock prices. By contrast, the value of household real estate rose to $11 trillion from $10 trillion.<<
I read recently that commercial real estate values are beginning to decline. Could household real estate be next?
I wonder if the Congress will look into ways of accelerating savings by increasing IRA and Keogh, 401K deductions.
They could also accelerate the LCF on the tax forms. I have a feeling that some of the dotbomb holders will need a lifetime to write off their losses.
<gg> |
