JACKSON HOLE, WY (AFX) - Federal Reserve research has found that profits generated from stock ownership is a "more potent factor" in determining consumer spending than gains realized from home sales, according to Federal Reserve board chairman Alan Greenspan.
And he said federal government statistics have not done a good job of capturing the impact that the "dramatic capital gains and losses in equity markets in recent years" have had on consumer behavior.
"Household capital gains on directly held equities and mutual funds in recent years have been two to four times the size of the overall gains on homes. The sheer size of such gains suggests that capital gains on equities have been a more potent force in determining spending on gains on homes," Greenspan said in an opening address to a symposium sponsored by the Kansas City Federal Reserve Bank.
Economists believe that for every dollar in wealth added to a household, consumer spending is increased by about three to five cents.

But the Fed is working on new statistics to help infer how consumers respond when the wealth is generated by different assets, for example stocks or home ownership.
Surveys suggest that for every dollar of wealth generated from the sale of homes is approximately 10 to 15 cents on the dollar, Greenspan said.
Consumers do not spend that much for each dollar of stock market gains, but the spending "is still larger in overall dollar magnitude," he said.
Greenspan said the government needs "more information than we currently possess about the nature and sources of capital gains and the interaction of these gains with credit markets and consumer behavior."
He suggested the government should develop "separate sets of accounts to track capital gains."
"As we endeavor to better understand how changes in the level and composition of wealth affect economic behavior, new accounting systems may be required to supplement those that have long served us so well," he said.