The aftershocks of the housing bubble could be more important than the bubble itself. This is not a prediction of a speculation. The Maestro has claimed that the wealth effect of the housing bubble is greater than that of the stock bubble. If so, then the effect on aggregate demand could be significant, especially because construction and the spending that follows it, such as furniture and appliances, is a significant part of the economy.
-- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu
