Economists report that there appears to be no proof that the U.S. housing market's downturn has had any major "spillover" impact on consumer spending, meaning that the slump is still confined to the residential property sector.

While substantially curtailed home construction has been a considerable drag on the nation's economic growth, consumers continue to provide an all-important offset, ramping up their spending in the last three months of the year.

Although the home building sector has been down in the second half of the year, in terms of both construction activity and real domestic product growth, there are signs of improvement.

Sales demand is rising, particularly for new homes; the National Association of Home Builders' index of housing market conditions has improved in the past two months; and weekly applications for home-purchase loans are rebounding after plunging sharply for more than a year.

Source: Business Week, James C. Cooper (12/04/06)