Quoted: Borrowing has propelled consumer spending in recent years, but that will be constrained, too. Lower house prices mean fewer lines of home equity. Banks, with their profitability in question, are lowering credit-card limits. Menzie Chinn, an economist at the University of Wisconsin, thinks consumers won’t spend freely again for five years.
“Basically, it’ll take a long time for households to rebuild their balance sheets, i.e., wealth, in the form of housing and equities,” says Mr. Chinn.