Macrovisor co-founder Ayesha Tariq analyzes the state of liquidity in US households by making money.
America's wealthiest households account for an increase in consumer spending as a market-driven profit for net worth fuel.
A report written by Moody Chief Economist Mark Zandy found that the top 10% of US households account for 49.7% of consumer spending in terms of revenue defined as earning more than $250,000. analysis.
That figure has risen significantly over the past 30 years, when up to 10% of incomes accounted for around 36% of consumer spending, Moody's analysis found.
Zandi's analysis suggests that US Gross Domestic Product (GDP) growth is heavily dependent on the spending habits of the most earned Americans. He estimated that spending by the top 10% of earners contributed at least a third of GDP.
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Moody's analysis found that up to 10% of earners account for about half of US consumer spending. (Getty Images/Mark Couz Larich via Getty Images/Bloomberg)
These findings are as fewer wealthy households continue to fight the effects of sustained inflation and the high interest rates that have hit the housing market.
From September 2023 to September 2024, when the most recent data used in the report was raised, up to 10% of income earners increased by 12% over that period, but low-income and medium-income earners Expenditures on both incomes fell in that respect. period.
“Wealthy households are financially safe and therefore more capable and willing to spend their income,” Zandi wrote. “So they save more than they save otherwise, which is consistent with estimates of consumer spending by income groups, and is at the top of the income distribution that drives recent spending growth. It shows that he is wealthy.”
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The proportion of consumer spending among middle- and low-income Americans fell from 2023 to 2024, according to the report. (Allen J. Schaben / Los Angeles Times by Getty Images) / Getty Images)
Zandi explained that wealth effects are subject to considerable fluctuations based on whether asset prices are rising or falling, whether value is valuing or depreciating, and the volatility of price changes.
“The econometrically based rule of thumb is that the sustainable and broad viewing of asset prices as we have enjoyed is consistent with the effects of two-cent wealth,” he wrote. “So for every dollar increase in net worth, consumer spending ultimately increases by 2 cents.”
“This may seem unwilling to start with, but we do arithmetic. Last year, the effect of wealth added all points to consumer spending growth, exceeding 0.7% on GDP growth.” writes Zandi. “Around a quarter of GDP growth last year was due to increased household wealth.”
The stock market valuation and rising home prices contributed to the impact of wealth found in Moody's analysis report. (Photographer: Getty Images/Michael Nagle via Getty Images/Bloomberg)
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Zandi warned that there could be a risk of wealth impacts being reversed, saying, “Given the growing valuation and increasing uncertainty in economic policy, the risk of significant revisions in the asset market is unpleasantly high; It has a clear impact on the economy.”
