BIS central bankers’ speeches  3  The heavy load of housing-related debt that many households are still carrying may be affecting consumer spending even more powerfully than would be suggested by the drop in house values alone.
For example, recent academic research has found that highly indebted households cut their spending on goods and services more severely in response to a drop in home values than do less-indebted households hit with the same reduction in home values.3 This result suggests that consumer spending may not act powerfully to revive the economy until Americans’ financial situations have improved.