Consumers' spending of cash extracted from rapidly rising home values has helped fuel the U.S. economy's expansion over the past few years. But the housing sector is cooling, and most analysts expect that support to consumption to falter.

With existing home sales off 7 percent in the second quarter and mortgage rates climbing, some economists see the ongoing refinancing spree as the once-hot housing sector's last gift to the nation's economy.

"That (money) is going right back into the economy in one fashion or another," Nothaft said. "Either it shows up through (home) alterations or shows up in consumption spending."

It is hard to tell exactly where refinancing cash is going, said Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies, and so gauging the impact of refinance spending "is pretty murky."

Still, he said, "all economist would agree that refinancing home equity loans has boosted spending."

Nothaft said many homeowners are refinancing now before their adjustable rate mortgage resets to a higher level. Those same people are likely to have seen the value of their homes jump in recent years.

Homeowners who are inclined to refinance and have stored-up equity make up a big share of the mortgage cash-outs, he said.

"Homeowners have amassed a huge amount of home equity wealth so that makes it incredibly easy to refinance," he said. "And, hey, if you want another $10 or $20 thousand for other purposes, it is very easy to do."

Still, Nothaft said, the refinancing cash-out spree is probably nearing an end. Freddie Mac expects homeowners to extract $152 billion out of their homes in 2007 and $108 billion in 2008.

Those numbers are still much higher than a decade ago. In 1996, refinancing cash-outs were $17 billion.

Part if the increase is due to a changing view of home mortgages, said Retsinas.

"One of the big changes is that people look at their home as a financial asset," he said. "In another generation, the notion was 'Burn the mortgage.' That phrase is not in fashion anymore."

That new attitude has some benefits for the economy, he said, and cash-outs "are keeping a floor on consumer spending."

Doug Duncan, chief economist of the Mortgage Bankers Association, credits the mortgage industry for making refinancing easier and cheaper in recent years.

Give homeowners with untapped reserves of wealth a simple process to refinance and they will naturally be tempted to cash-out, he said.

"Those two things together are benefiting the economy to some degree," he said.

He also credited the variety of mortgage products that let homeowners delay mortgage payment shock - and so have more money to spend in other sectors of the economy.

Many homeowners who have a teaser interest rate due to expire, for instance, might now refinance with a fixed rate mortgage before interest rates get any higher.

Such a move, Duncan said, "cushions the economy from the full impact of rising interest rates."

The Conference Board, a private research group, found that at the start of the summer, 40 percent of consumers had no plans to take a vacation over the next six months - the lowest percentage recorded by the group in 28 years. A survey by the Gallup Organization in May based on telephone interviews with a national sample of 1,003 adults found that 43 percent of respondents had no summer vacation plans.

About 25 percent of American workers in the private sector do not get any paid vacation time, the Bureau of Labor Statistics reports. Another 33 percent will take only a seven-day vacation, including a weekend.

"The idea of somebody going away for two weeks is really becoming a thing of the past," said Mike Pina, a spokesman for AAA, which has nearly 50 million members in North America. "It's kind of sad, really, that people can't seem to leave their jobs anymore."

Shrinking-vacation syndrome has gotten so bad that at least one major American company, the accounting firm PricewaterhouseCoopers, has taken to shutting down its entire national operation twice a year to ensure that people stop working - for about 10 days over Christmas, and 5 days or so around the Fourth of July.

"We aren't doing this to push people out the door," said Barbara Kraft, a partner at the firm in the human resources office. "But we wanted to create an environment where people could walk away and not worry about missing a meeting, a conference call or 300 e-mails."

The company tracks vacation time so that when employees fall behind, they are reminded through an electronic nag that they should be getting out of the office more. And posters evoking lazy days away from work were put up in the New York offices. Hint. Hint.

The heightened pace of American life, aided by ever-chattering electronic pocket companions, gets much of the blame for the inability of many people to take extended periods of forced sloth.

"I thought I would take at least five days off and go somewhere, but I couldn't find the time," said Tina Yang, who teaches first grade at Fruit Ridge Elementary School in Sacramento. She has the summers off, but her days are filled with catch-up work, conferences and projects, she said.

"I realize I just go to work and then home, work and then home - it's no way to live," Ms. Yang said.

The Travel Industry Association, the largest trade group representing the industry, found that the average American expects his or her longest summer trip to last only six nights. And it takes three days just to begin to unwind, experts say.

Company leaders at PricewaterhouseCoopers said they started their nationwide shutdown because people were not getting their batteries recharged. Now that the entire work force of about 29,000 takes a vacation, company officials say they are seeing positive results.

"It has taught our people what it is like to have unencumbered time," Ms. Kraft said.

By hiring more revenue officers, the I.R.S. could collect more than $9 billion each year and spend only $296 million - or about three cents on the dollar - to do so, Charles O. Rossotti, the computer systems entrepreneur who was commissioner from 1997 to 2002, told Congress four years ago.

I.R.S. officials on Friday characterized those figures as correct, but said that the plan Mr. Rossotti had proposed had been forestalled by Congress, which declined to authorize it to hire more revenue officers.

Critics of the privatization plan point not only to the higher cost but also to what they say is a greater potential for abuse. With private companies in the mix, they say, debtors could more easily be tricked into paying money to scam artists using spoof Web sites or other schemes, a problem the I.R.S. alerted taxpayers to in April. Brady R. Bennett, collections director for the I.R.S., said that by 2008, about 350,000 past-due tax records will be distributed among about 10 private debt-collection agencies. To guard against fraud, he said, the agencies will contact taxpayers only by telephone or mail - not the Internet - and will instruct them to send all payments directly to the United States Treasury, not the private collection agency.

One of the three companies selected by the I.R.S. is a law firm in Austin, Tex., where a former partner, Juan Peña, admitted in 2002 that he paid bribes to win a collection contract from the city of San Antonio. He went to jail for the crime.

Last month the same law firm, Linebarger Goggan Blair & Sampson, was again in the news. One of its competitors, Municipal Services Bureau, also of Austin, sued Brownsville, Tex., charging that the city improperly gave the Linebarger firm a collections contract that it suggested was influenced by campaign contributions to two city commissioners.

Joe Householder, a spokesman for Linebarger, which specializes in delinquent tax collections, said it had resolved the issues raised by the Peña case in 2002 and that it believed it had acted properly in Brownsville. The mayor of Brownsville, Eddie Treviño Jr., said that the contract vote had been unanimous and scoffed at the accusations of misconduct.

The two other companies that have won debt collection contracts from the I.R.S. are Pioneer Credit Recovery of Arcade, N.Y., a division of the SLM Corporation, and the CBE Group of Waterloo, Iowa.

The main objection so far to the privatization program is that it is more expensive than internal collection. "I freely admit it," Mark W. Everson, the tax commissioner, told a House of Representatives committee in March.

Privatizing government services is often promoted as a way to cut costs. But the government would probably net $1.1 billion from private debt collectors over 10 years, compared with the $87 billion that could be reaped if the agency hired more revenue officers, as Mr. Rossotti had recommended.

Taxpayer rights are at risk with privatization, Nina B. Olson, the I.R.S. taxpayer advocate, warned Congress earlier this year. "Because private collectors will operate under rules of profit maximization rather than the I.R.S.'s customer-service based policy," she warned, the private collectors may have less incentive to safeguard taxpayer rights.

Al Cleland, a retired I.R.S. tax collector in Minnesota, predicted that using private collectors would cause some debtors to owe more.

"We always told people to get current on their taxes first, so they would not have more penalties added, and then work on paying off their back taxes," Mr. Cleland said. "A private collection agency has no incentive to tell taxpayers that, so people will pay more penalties."

Mr. Bennett of the I.R.S. said that such advice was correct, but that it applied primarily to small business owners, whose cases will not be sent to the private agencies.

Under federal budget rules, money spent to hire tax collectors is treated as a discretionary expense, and Congress is cutting discretionary spending. In business terms, the rules treat the I.R.S. as a cost center, not as the government's profit center.

The private debt-collection program, however, is outside the budget rules because, except for the start-up costs, the collectors are to be paid from the proceeds.

"Medium-term risk (for the euro) remains to the upside given the likelihood of more European Central Bank rate rises, but this is unlikely to proceed in the short-term," wrote Ian Gunner, a currency analyst at Mellon Financial, in a note to clients.

The ECB is expected to raise rates as many as two more times by the end of the year, while there are growing expectations the Federal Reserve may continue to keep rates at 5.25% following tame inflation data.

The Frankfurt-based central bank has lifted interest rates four times in quarter-point increments in the last nine months, most recently earlier this month, when it raised its key rate to 3%. The ECB will make another decision on interest rates on Aug. 31, but it's not expected to lift its key rate at that meeting.

Data from Europe's largest economy, Germany, this week may influence European rate sentiment.

On Tuesday, the ZEW Institute releases its poll on investment and analyst sentiment toward Germany. On Thursday, the Ifo Institute unveils its poll on business sentiment toward Germany.

Both polls are expected to register declines in sentiment in August compared to July.

It's a quiet week ahead for U.S. economic data, with orders for durable goods and home sales the only major releases. See economic calendar.

The yen, meanwhile, held onto Friday's gains following China's move to lift interest rates. The yen frequently trades as a proxy to the yuan, since the latter currency is only allowed by Chinese authorities to trade in a narrow band.