Ours is a wealth-driven era, when huge increases in home values and (before that) stock prices make people feel richer and cause them to buy more. They spend more of their regular incomes, borrow more or sell something, most likely stocks. You can imagine this "wealth effect" as a powerful afterburner that's boosted the economy for roughly 20 years. While everyone is now worrying about the economic impact of Katrina and Rita— on consumer confidence, energy prices, inflation and the federal budget—the real story may be whether the afterburner is flaming out.
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