Analyst: Lagging Housing Sector Won't Affect Consumer Spending

An article in today’s Wall Street Journal states that Americans are falling behind in their mortgage payments. And it’s not just the subprime loans reserved for higher-risk borrowers that are taking a hit. Other parts of the mortgage market are being affected as well. Mickey Levy – chief economist with Bank of America – spoke with Liz Claman on “Morning Call” today about whether or not the housing slowdown is strangling the U.S. consumer.

Levy did see some constraint in consumption growth – but weakness in housing and mortgage refinancing has never been all that important a factor – and it won’t be this time. Measured year-over-year – consumption has only fallen three times in the past 45 years.

Levy feels the most important factors driving the consumer – real disposable income, real interest rates, wealth – are all positive at the moment.

“Product demand is continuing to grow, and as long as it does, the weakness in housing will have a relatively localized impact on the overall economy,” Levy says.