by Calculated Risk on 5/22/2007 11:47:00 AM

Here are the updated estimates of home equity extraction for Q4 2006, provided by Jim Kennedy based on the mortgage system presented in "Estimates of Home Mortgage Originations, Repayments, and Debt On One-to-Four-Family Residences," Alan Greenspan and James Kennedy, Federal Reserve Board FEDS working paper no. 2005-41.

For Q4 2006, Dr. Kennedy has calculated Net Equity Extraction as $82.8 Billion, or 3.42% of Disposable Personal Income (DPI).

This graph shows the MEW results, both in billions of dollars quarterly (not annual rate), and as a percent of personal disposable income.

Although my estimate (presented yesterday) is close, I'd prefer to use the Kennedy-Greenspan numbers to avoid confusion. I will also present an advance estimate based on the BEA estimates when the advance GDP report is released (more later today on this advance estimate).