The economic data this week has presented a brighter picture compared to recent trends. The consumer spending this past August was stronger than expected along with the income. Companies and households have continued to spend more while inflation has been soft. Housing also showed signs of life. GDP growth has been revising upward. Stock markets like Dow, Nasdaq, S&P 500 have increased due to AI, industrial strength and corporate profits. The stock market strength is keeping the United States economy out of a recession by boosting the consumer spending. Wealthy households are playing a major role into all of this. The large stockholders are also spending more.
Some could see this as a bad thing. A large majority of the spending is coming from wealthier households because there stock portfolios are booming. According to the University of Michigan survey, the consumer sentiment has heavily decreased since January, it hurts those that have little or no stock exposure. There is a major risk with all that is going on. If the stock market was to fall, the spending could decrease because job growth is very weak. This could leave the economy vulnerable.
Chanden Lee: Sunday, September 28, 2025
2 comments:
https://www.cnbc.com/2025/09/27/wealth-effect-stock-market-recession.html
Makes sense. If most of the spending is coming from people with stocks, that leaves the rest of the economy exposed. If the market dips, demand could dry up quick since job growth isn’t really picking up.
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