The Stock Market's Effect on Consumption Is Limited and Slow

An NYT article discussing the impact of the European sovereign debt crisis on the U.S. economy raised the possibility that it could lead to a fall in the stock market, which would then slow consumption. It is worth noting that consumption tends to respond with a lag to changes in the stock values, and even then the impact is relatively limited.

For example, the tech crash began in March of 2000, however consumption rose by 3.8 percent, 4.0 percent, and 3.6 percent in the following three...