Wealth Effect Stock Market Recession

The growth of the stock market, which appears to be impermeable to photographs of tariffs, politics, mo death work, is to promote consumer spending and place the floor under the economy that many have ever expected to be on the verge of a recession.

This week’s economic data draws a surprisingly bright picture of recent trends.

Consumer spending in August was stronger than expected, and so was revenue. Businesses and households continue to order expensive items, but inflation is relatively soft. Even the homes showed signs of life as new sales rose three years in August.

Previously, this trend was driven by trillions of stimulus packages, both from Congressional spending and low interest rates and liquidity injections from the Federal Reserve.

But the story is now shaking towards the new highest highs of major stock indexes despite the effects of popular wealth coming from Wall Street and the lofty ratings.

“I think it goes to the bounce of the stock market and the effects of wealth,” said Mark Zandy, chief economist at Moody’s Analysis, on CNBC on Friday. “I think all spending comes from wealthy, high-income, high-net households who see their stock portfolios go up.

Certainly, the market has been boosted by massive AI spending this year, but thanks to the strength of large industrial companies and communication giants, it has enhanced step-like climbing by gatherings. The Dow Jones industrial average has reached over 9%, while the high-tech NASDAQ composite has risen by 23%.

As is the case now, consumers are almost always happy when stocks rise and unemployment rates are low. However, sentiment this year, measured at the University of Michigan, has been steadily declining, down 23% from January when President Donald Trump took office.

Double-edged sword

Michigan’s gauge fell 5.3% in September, but research director Joan Hussou noted the abnormal.

This makes sense given that the stock market set a new set of records this month. Asset owners are happy, the top 10% of US incomes own 87% of the market, according to St. Louis Fed Fed data.

According to Zandi, that is also why economic strength can be built on the sand.

“If the stock market turns south for some reason, the economy is very fragile,” he said. “People start to look red on screens, not green on screens, and savings rates don’t fall. In the current context of no employment growth, it’s a recession.”

Concerns about the stock market focus primarily on valuations. S&P 500 According to FactSet, it is currently trading at 22.5x expected revenue over the next 12 months.

All of that, recent economic data shows that there is little pressure from a recession.

Consumer spending rose 0.6% in August, according to the Commerce Department’s numbers released on Friday. Inflation-adjusted spending has increased by 0.4%, indicating that consumers can raise prices.

In inflation, the annual rate remains well above the Fed’s 2% target, with core retention of 2.9%. However, monthly increases are roughly parallel to previous trends and Wall Street forecasts, with the Fed almost certainly meeting its target for interest rate cuts in October, and perhaps another target when they meet again in December.

“The economy continues to surprise its benefits, and despite the negativity captured in research and expressed by commentators, actions speak more eloquent than words and consumers, which is why business profits continue to surpass expectations.”

Better news, more dangerous

There were other good economic news this week too.

Gross domestic product grew at an annual pace of 3.8% in the second quarter, according to Thursday’s revision. Again, the surprising reason is that consumer spending was significantly stronger than previous estimates. Additionally, the Atlanta Fed has raised its third-quarter GDP tracking estimates, bringing its expected growth rate by up to 3.9%, or 0.6 percentage points higher than its last update a week ago.

Also, while new home sales were surged by 20%, durable product orders rose unexpectedly. A few weeks ago, claiming that unemployment claims were on the rise, proved to remain low in layoffs, but salary growth was also static at best.

Even at the top consumers that drive growth, the number of macroeconomics tells the story of stability at least.

“In many cases, when people feel pessimistic about the nearby economy, they start governing with spending, but that hasn’t been the case so far,” said Elizabeth Rental, senior economist at consumer site Nerdwallet. “In fact, it is believed that consumer strength has maintained the economy strong over the past few years despite high inflation, high (interest) rates and great uncertainty.”

However, renters also look at the edge of the knife where the economy sits, and see broadly that it has declined and the overall emotional level is consistent with the recession as consumers are not taking part in the stock market party.

“Wealth offers some degree of insulation from perceived economic volatility, and investors are mostly OK,” she said. “Consumers are tailoring current economic risks, such as inflation and labor market debilitating, as food prices rose sharply last month or because they rose from headlines tracking key economic data.