Economists say the rising stock market is giving an added boost to consumer spending through what is known as the "wealth effect."

Key Points

  • The wealth of the top 1% hit a record $44.6 trillion at the end of the fourth quarter.
  • All of the gains came from stock holdings thanks to an end-of-year rally.
  • Economists say the rising stock market is giving an added boost to consumer spending through what is known as the “wealth effect.”

The wealth of the top 1% hit a record $44.6 trillion at the end of the fourth quarter, as an end-of-year stock rally lifted their portfolios, according to new data from the Federal Reserve.

The total net worth of the top 1%, defined by the Fed as those with wealth over $11 million, increased by $2 trillion in the fourth quarter. All of the gains came from their stock holdings. The value of corporate equities and mutual fund shares held by the top 1% surged to $19.7 trillion from $17.65 trillion the previous quarter.

While their real estate values went up slightly, the value of their privately held businesses declined, essentially canceling out all other gains outside of stocks.

  • Etterra@lemmy.world
    6·
    8 months ago

    Most people don’t have any money to invest at all, much less enough money to safely invest to live on comfortably. Most people live paycheck to paycheck just hoping nothing major comes up like a sudden illness or broken car.

    • theotherverion@lemmynsfw.com
      16·
      8 months ago

      Hence why the government should strive for as open economy as possible, so there is competition in the market and so the wages go up. Or if the government is not capable of doing that, they can move.