from the Dallas Fed
— this post authored by John V. Duca, Anthony Murphy and Elizabeth Organ
A combination of much less household debt, revived access to consumer credit and recovering asset prices have bolstered U.S. consumer spending. This trend will likely continue despite an estimated 50 percent reduction since the mid-2000s of the housing wealth effect – an important amplifier during the boom years.
Understanding aggregate consumer spending is important. Consumer spending accounted for more than two-thirds of U.S. gross domestic product (GDP) in 2015 and for 1.5 percentage points of the 2.0 percentage-point average GDP growth in the past five years.
Access to credit and the amount and composition of wealth greatly influence household consumption and saving. In the U.S., increased availability of consumer and mortgage credit, along with rising asset prices, contributed greatly to the consumption boom in the mid-2000s; reversals in these factors exacerbated the bust in consumption during the Great Recession.
Debt accumulated during the boom years restrained consumer spending for several subsequent years, and the housing wealth effect is only half what it was in the mid-2000s. More recently, however, large reductions in household indebtedness, revived access to consumer credit (credit not secured by real estate) and recovering asset prices have helped bolster U.S. consumer spending and will likely continue to do so.
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Source: http://www.dallasfed.org/assets/ documents/ research/ eclett/ 2016/ el1603.pdf