That's right folks, the Post tells us that Citigroup equity strategist Tobias Levkovich anticipates that consumption might be constrained because of "a shrinking sense of wealth, especially among the top 20 percent of wage earners, who account for the bulk of equity investments and 40 percent of consumer spending." Mr. Levkovich is obviously referring to the loss of stock wealth due to the recent crash. However for most people, the major loss of wealth was the loss of equity in their home. This loss is already in the range of $5 trillion and will be close to $8 trillion before the housing market stabilizes. This will reduce annual consumption by between $400 billion and $480 billion. The incompetence of Citigroup's analysts caused its stockholders to lose most of the value of their holdings and contributed to the growth of the bubble. The Post might try to rely on sources who are more knowledgeable about the economy for its articles.
--Dean Baker
