July 2009, David Rosnick

This paper examines the effects of the housing bubble on equity accumulation and wealth. The paper notes that the run-up in home prices prior to the collapse of the bubble both led to a temporary increase in consumption during the peak years and, due to the bubble-induced recession, will lead to a prolonged period of lower consumption and higher personal savings resulting in a fall in GDP of over 5 percent a year since the peak of the bubble in 2006.

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