The foundations of financial stability can still be shaken even if there are no mass defaults, because households' consumption may decline sharply in response to lower real income and the "wealth effect". This could reduce output and increase the probability of recession, and potentially result in higher risks to banks' asset quality through corporate defaults.
Households do appear to be responding to higher energy prices--driving less and favoring more fuel-efficient vehicles, for example--and overall the growth of consumer spending has slowed from the pace late last year and earlier this year. However, futures prices for crude oil and wholesale gasoline suggest that some portion of the post-hurricane increase in retail energy prices is likely to reverse over coming quarters.