Former Federal Reserve Chairman Alan Greenspan says that the worst of the housing adjustment is over and “sales figures have stabilized.”
He predicted that inventory levels will come down at a "reasonably rapid pace.” He also foresees housing price declines that will have an impact on consumer expenditures. “We haven’t see it yet,” he says.
Greenspan also announced he is preparing to publish an analysis of the effect of mortgage wealth on consumer spending. The paper will include data on gross equity extraction dating to 1968 and a more detailed analysis of data from 1991 to the present.
The thesis, he says, is whether extracted equity is "acting as a proxy for all types of financing of goods that would've been bought anyway."
Greenspan didn’t say when the analysis will be available.
-- Associated Press, Vinnee Tong (11/28/2006)