Wealth effect stock market recession

Tariffs, Politics and Moribund works, which seem to be imprisoned against the painting, give power to consumer expenditures and put them under an economy waiting to be swinging on the threshold of stagnation so far.

This week, economic data drew a surprisingly bright picture of the latest trends.

In August, consumer expenditures were stronger than expected and would come. Companies and households continue to order large ticket goods, while inflation is relatively soft. Even housing showed signs of life and new sales reached the highest level of three years in August.

Previously, such trends were warned by trillions of liquidity injections from both congress expenditures and low interest rates and liquidity injections from the Federal Reserve.

However, now the narrative shifts towards new high levels in large stock indices, despite the popular separation effect from Wall Street and supreme values.

Mark Zandi, the leading economist of Moody’s Analytics, said in a statement on Friday, CNBC, “I think this is going to the effect of jumping on the stock market and the effect of leaving.” He said. “I think all expenditures come from highly -income high -valuable households who see that their stock portfolios are over and they feel much better and spend.”

Indeed, Sunday saw a staircase climbing with a higher AI this year, which was undoubtedly gathered through the power of large industrial companies and communication giants. The Dow Jones industrial average gained more than 9%, while technology -oriented Nasdaq composite increased by 23%.

Almost always happier consumers are always happier when the stocks are finished and unemployment is low as it is now. However, emotions measured by the University of Michigan this year, since President Donald Trump took office, has fallen by 23% since January.

A sharp sword

Michigan Gauge 5.3% fell in September, Although the research director Joanne HSU recorded an abnormality: “Emotion for consumers with larger stock assets in September has decreased emotion for those who have no smaller or non -existence.”

This makes sense to think that the stock market creates new records this month. The first 10% of the winners in the USA have 87% of the market, Louis Fed dataAsset owners have a reason to be satisfied.

According to Zandi, this is a reason why economic power is built on sand.

“The economy is very vulnerable if the stock market returns south,” he said. “People start to see red on their screens and not green on their screens, the savings rate does not fall. This is the stagnation in the context of the current business growth.”

The concerns about the stock market focus on values ​​primarily, S&P 500 According to Factset, it is currently expected to be much higher than five- (19.9) and 10 years (18.6) tendencies for the next 12 months for the next 12 months.

For all these, the latest economic data show a small number of stagnation pressure.

According to the trading department figures published on Friday, consumer expenditures increased by 0.6%in August. Expenditures set for inflation increased by 0.4%, which shows that consumers can still air price increases.

In inflation, the annual ratio is still exceeding the 2% target of the FED and the core holding is 2.9%. However, monthly increases are compatible with previous trends and Wall Street forecasts, and when it meets again in December, it puts the Fed on the target for an almost a sowing rate deduction.

“The economy is up to the words and consumers continue to spend loudly than words and continue to spend institutional profits,” Northlight Asset Management Chief Investment Officer Chris Zaccarelli said, despite the negativities expressed in the surveys and interpreters. He said.

Better news, more danger

There were other good economic news this week.

According to a revision on Thursday, gross domestic product increased by 3.8% annually in the second quarter. Again, the reason for the upward surprise was that consumer expenditures were much stronger than the previous prediction. Moreover, Atlanta raised the Fed Gdyih monitoring estimation For the third quarter, the expected growth rate is 3.9%or 0.6 percent higher than the last update a week ago.

In addition, durable goods orders increased unexpectedly, while new home sales increased by 20%. A few weeks ago, everything that emerged as an increase in unemployed claims, but the payroll growth was at best, although static, was low.

First of all, even if there are consumers at the top end that directs growth, macroeconomic numbers tell at least one story of stability.

“Most of the time, when people feel pessimistic about the future economy, they begin to reign in spending, but so far.” He said. “In fact, despite the high inflation, the power of the consumer has been credited by keeping the economy strong for the last few years. [interest] rates and great uncertainty. “

However, Renter also drew attention with the general level of emotion levels of the knife, where the economy was sitting, where a large consumers did not participate in the stock market party and therefore did not feel down and that they did not feel down and consistent with stagnation.

“Servet provides a little insulation from the perceived economic volatility, and investors are largely good.” He said. “Consumers adapt to existing economic risks-eneflation and labor market weakness. This is due to the first-hand experiences-the moon food prices are increasing significantly-or they are caused by important economic data.