Only 3% of US consumption came from higher Home Equity!

There is a general misconception that the housing boom was the main source of US consumption. That boom seems to have ended decisively. Therefore, ordinary investors frequently wonder how the US economy will recover.
In an essay from Paul Swartz at Brad Setser's blog the US mortgage credit levels are examined in relation to the housing boom.
This paper by Alan Greenspan and James Kennedy is referenced in Paul Swartz’s essay.
Here’s my analysis of the percentage of US consumption that came from cashing out on US home equity:
Only 3 percent of spending (2001-2005) came from using homes as ATMs!!!
An excerpt from the Greenspan/Kennedy paper linked above:
” According to our estimates, from 1991 to 2005, equity extracted from homes was used directly to finance an average of close to $66 billion per year of PCE, about 1 percent of the total (lines 9 and 10). From 1991 to 2000, equity extraction financed an average of 0.6 percent of total PCE, but since then that share has risen to almost 1-3/4 percent. If we include non-mortgage debt repayments (in which, as mentioned above, installment debt is used as bridge financing for PCE, with home mortgage debt as the ultimate source of funding), equity extraction financed an annual average of about $115 billion of PCE from 1991 to 2005, 1.7 percent of total PCE (lines 12 and 13). By this broader measure of PCE funding, equity extraction financed 1.1 percent of PCE from 1991 to 2000 and close to 3 percent from 2001 to 2005.”
In my simpler words:People got money out of the mortgage boom by selling homes, taking out new home equity loans and taking cash out refinancing loans. They repaid some non mortgage debt and spent other money directly on personal consumption expenditure. The total of that non mortgage debt repayment and the PCE is only 3% of the total PCE in the US economy for the years 2001-2005!
Since 2005 is the last year of data in the paper linked above, I've separately calculated the percentage for that year below: (Please refer to Table 2 in the paper) For 2005, line (1) in Table 2 shows a total home equity free cash extraction of $ 1,428.9 billion. $ 143.9 billion of that was used to repay non mortgage debt (line 5), and $ 182.7 billion was used for PCE (line 9).According to NIPA total PCE in 2005 was $8893.7 billion. $326.6 billion, or just 3.67% of PCE was financed by using homes as ATMS in 2005.Suppose from the NIPA table you exclude “durable goods” PCE altogether. Of the total non-durable goods PCE, only 4.14% came from using homes as ATMs. If using homes as ATMs only funded a small percentage of the PCE in US GDP, there’s a great deal of hope for US economic recovery once the ongoing credit squeeze is sorted out with the Geithner bank bailout plan.