Where the Stock Market Goes, the US Economy Will Follow
America’s wealthiest households are driving economic growth, thanks to their investing gains.
Leading the way.
Photographer: Spencer Platt/Getty Images North AmericaThere’s an old Wall Street saying that “the stock market is not the economy.” That’s usually true. But, in this economic cycle, stock market gains have become an increasingly important driver of consumer spending, helping to fuel growth as other areas of the economy cool.
The Wall Street Journal reported last month that high earners in the US increased their spending by 12% in the year through September 2024, while lower-earning cohorts cut back. The divergence can’t be explained by wage growth, which decelerated at more or less the same rate for workers in all income buckets over that time period. It’s best explained, instead, by the wealth surge for workers and retirees with significant stock market portfolios.