Consumers taking less cash out of homes, but still spending more.

In the second quarter of 2006, Americans reduced cash-out refinancing or home equity loans on their homes to an annual rate of $497 billion, down sharply from the peak of $871 billion in the third quarter of 2005.

However, predictions that consumers would reduce spending as they took less cash out of their homes proved not to be true. Purchases of goods and services in the second quarter increased by an annual, inflation-adjusted rate of 3%, according to the Wall Street Journal.

Economists disagree (of course) on the reasons for this, but some continue to predict a decline in consumer spending. in the future.

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