Current Issues in Economics and Finance
After the Refinancing Boom: Will Consumers Scale Back Their Spending?
December 2003 Volume 9, Number 12
JEL classification: E2, E21

Authors: Margaret M. McConnell, Richard W. Peach, and Alex Al-Haschimi

Concerns are rising that the recent surge in home equity withdrawal has left consumers in a weakened financial position that will, over time, prompt a retrenchment in spending. However, a look at household assets and liabilities suggests that consumers have used the withdrawn funds to restructure their balance sheets and reduce their debt service burden. As a result, households may be in a better position to spend in the years ahead.

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