Standardization of the wealth effect market

The growth of the stock market, which seems unworthy of definitions and politics and an unchastational function image, in turn works to operate consumer spending and placing a floor under an economy that many expect to be affected by the brink of the recession now.

Economic data this week painted an amazing bright picture of modern trends.

The spending of consumers in August was stronger than expected and was the income. Companies and families continue to request large ticket elements while inflation was relatively soft. Even housing showed signs of life, with New sales up to three years old In August.

Previously, such trends are supported by trillions of stimulation from both spending in Congress, low interest rates and liquidity injection of federal reserves.

But the narration is now turning towards the impact of the famous wealth of Wall Street and the background of the new highlands in the main stock indicators despite the noble assessments.

“I think this goes to the bounce in the stock market and the impact of wealth,” said Mawody’s chief economist at Moody’s Analytics on Friday. “I think that all spending comes from high -income families with a high income, which testifies that their shares are rising and they feel a great improvement and spend.”

In fact, the market witnessed a rise in the stairs of the stairs to the top of this year, backed by huge artificial intelligence spending, but also in giving the power to the power in major industrial companies and communications giants. The industrial average has gained more than 9 %, while the nasdaq compound, which focuses on technology, increased by 23 %.

Consumers are always happier when stocks and unemployment explode are low, as currently. However, the feelings this year as measured by the University of Michigan in a steady decrease, decreased 23 % since January when President Donald Trump took office.

Double Slide

Michigan scale 5.3 % decreased in September, Although the director of the survey, Joan Hsu, noticed an anomalies: “The feelings of consumers who have greater property in stocks hold steadily in September, while the feelings decreased for those who have smaller or non -existent possessions.”

This is logical, given that the stock market has been set A series of new records This month. Since the top 10 % of US owners own 87 % of the market, according to Fed St. data LouisAsset holders have a cause of symptoms.

This is also, according to Zandi, a reason for the economic power on the sand.

“The economy is very weak if the stock market is heading south, for any reason,” he said. “People begin to see the red color on their screens and not green on their screens and the savings rate does not rise. In the current context of the lack of job growth, this recession.”

Fears on the stock market focus mainly on the reviews, with S & P 500 Currently traded at 22.5 times of the expected profits over the next 12 months, much higher than the five (19.9) and 10 years (18.6), according to FactSet.

On all of this, modern economic data indicates a few stagnation.

Consumer spending in August It increased by 0.6 %, according to the numbers of the Trade Administration issued on Friday, which was better than expected. The amended spending of inflation increased by 0.4 %, indicating that consumers are still able to increase weather prices.

Upon inflation, the annual rate is still more than 2 % of the Federal Reserve’s goal, with a 2.9 % foundation. But the monthly increases are in line with the previous trends and Wall Street’s expectations, which puts the federal reserve on the target almost to reduce October prices and perhaps another when it meets again in December.

“The economy continued to surprise the upward trend, and despite the negativity that was captured in investigative studies and was expressed by commentators, the procedures speak higher than words and consumers are still spending, and this is the reason that companies’ profits continue to overcome expectations,” said Chris Zakarili, chief investment employee in North Light.

More good news, more danger

There was good economic news this week as well.

GDP grown at an annual rate of 3.8 % in the second quarter, according to a review of Thursday, which was half a percentage point above than previously thought. Once again, the reason for the upcoming surprise was that consumer spending was much stronger than the previous appreciation. Moreover, Fed Atlanta Fed raised Appreciation of the gross domestic product For the third quarter, the expected growth rate pushed to 3.9 %, or 0.6 degrees Celsius higher than the last update a week ago.

Also, the orders of the strong goods increased unexpectedly while the sales of new homes increased by 20 %. All that came as a height Unemployment claims Two weeks ago it turned to this as a decrease, although salary growth was also fixed at best.

Even if consumers in the first place eventually lead growth, the total economy numbers at least tell a stability story.

“Often, when people feel pessimistic about the economy close to capturing, they start governing spending, but this has not yet,” said Elizabeth Rinter, the major economists at the Nerdwallet site. “In fact, consumer strength is attributed to maintaining the strength of the economy in the past for the past property, despite high inflation, high rates of high (interest) and great certainty.”

However, RNER also referred to the edge of the knife on which the economy sits, with a wide range of consumers that does not join the stock market party and thus a feeling of decline, and comprehensive feelings levels in line with the recession.

She said: “Wealth provides some insulation from the visible economic fluctuations, and the investors were doing a large job.” “Consumers are compatible with the current economic risks-inflation and the weakness of the labor market. This may be due to direct experiences-food prices have increased significantly in the past month-or because they are on an edge of the main headlines to track the main economic data. In any case, people do not feel comfortable with the economy, their place inside it or wherever everything.”