REPORT Economic GrowthHealth and Social Programs

The Rise and Fall of the American Residential Equity Empire


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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