Steindel, senior vice president of the New York Fed’s research and statistics group, suggested that a recent wave of foreclosures may not have a strong impact on consumer spending. “The people who are really struggling to pay for teaser rates on option [adjustable-rate mortgages] probably would not spend a lot of money on furniture and appliances and other things,” he said. “It’s a little difficult, to my mind, to just say, “Of course the people who are going to be foreclosed or walk away from their homes are going to have a massive consumption impact.’”

He also pointed to a marked decrease in homeowners taking home equity loans since the beginning of 2006 — a decline that he noted was wasn’t accompanied by a corresponding decrease in consumer spending. Steindel argued that consumer spending, until the last two quarters, “has held up pretty strong.”

“Home equity is like an ATM,” Steindel said. “It’s nice to have, but it isn’t what determines your spending.”The Economic Report of the President, issued by the White House Council of Economic Advisers in February, said “some calculations suggest that a $100 billion decline in the value of the housing stock would reduce the long-run level of annual consumption by between $4 billion and $8 billion.”

Steindel on Thursday was careful to state that “the downside risks [of declining home prices] are potentially quite large,” but that the estimates of the effect on consumption “are highly uncertain.”

Tags: Managing change, Market