The worst pullback in consumer spending since the 1970's has apparently come to an end, as the following chart shows:

Since August this data point has reentered positive territory -- a fairly good indicator that a recession is over. Still, the major worry out there is that the end of the home-as-ATM era means people will have fewer funds to spend. This in turn would imply that a return to the long-run-average of 3.5% annual growth in spending is a long shot.

But a new study by the Boston Fed's Daniel Cooper suggests that we shouldn't be overly concerned with the impact of declining home-equity extraction on spending. Cooper argues that only the credit-constrained (that's economist shorthand for those with little access to credit) borrowed heavily against their homes to consume. He estimates that an 11% decline in housing wealth in 2008 lead to only a 0.75% fall in non-housing-related spending. In other words, declining home prices could only have a small impact on people's willingness to spend. The basic reason is that, in a given year, the majority of homeowners are not credit constrained, so a big drop in home prices shouldn't affect their spending ability (that is, if you believe Cooper and Willem Buiter's contention that the housing wealth effect is really the housing-as collateral effect).

Sure, there are other reasons why Americans might be more cautious about spending going forward: Say, a post-crisis change in the consumption culture or the impact of high credit card debt levels. On the other hand, a better-than-expected job market, which isn't out of the question, might put many worries to rest.