WASHINGTON (7/29/08)--Bill Hampel, chief economist for the Credit Union National Association, weighed in on the effect the U.S. housing crisis will have on savings in a Sunday article that appeared in ChicagoTribune.com .
Because homeowners can no longer use rising real estate valued to borrow cash, spending will fall, the article said. It originally ran in Bloomberg News.
After Americans go through their tax-rebate checks this summer, consumer spending will fall into negative territory, Hampel explained.
With mortgage lenders requiring 20% down payments, the average household--which saves less than 1% of after-tax pay--will have to save 10% for 10 years to buy a home.
The residential housing slump will "change the structure" of the U.S. economy and force Americans to save, Neil Soss, chief economist at New York-based Credit Suisse Group, said.
courtesy of cuna.org