Fears that a bear market in the United States will dampen consumer spending and cause a recession are unfounded. This is not to say that the U.S. economy will not experience a slowdown. But when the recession comes, it will be for a different reason.
There is a widespread misunderstanding of the link between the stock market and the real economy based on the belief that higher consumption prompted by a "wealth effect" has been the driving force behind America's impressive economic performance. Quite the opposite is true. High consumption is an effect rather than a cause of economic activity.
Another sobering fact is that the "boom" experienced in the U.S. was an unsustainable expansion based on illusions supported by the loose-credit policies of the U.S. Federal Reserve. Now for the real shocker. Fed Chairman Alan Greenspan is the source of the problem, so he cannot provide a cure.