Figure 3 RATIO OF TOTAL CONSUMPTION TO PHYSICAL WEALTH

sumption are now justified by high levels of total wealth. The ratio TC/ TW is now at a postwar low. Since the rise in TC/TW was temporary, it may be relatively easy to explain. Transitory shocks like the 1980, 1981-1982, and 1990-1991 recessions, and the rapid expansion of consumer credit, can probably jointly explain a significant fraction of the temporary rise in TC/TW. Finally, collapsing stock prices could rapidly change all of my conclusions. If stock-market wealth falls dramatically (>30%), but consumption stays the same, the consumption puzzle will be resurrected. Unfortunately, I am not able to forecast future values of either the numerator or the denominator of my ratio.