Stock Market Wealth Directly Boosts Household Consumption, Study Finds
The article explores how changes in stock market wealth affect household spending. By analyzing data from the Consumer Expenditure Survey, the researchers found that increases in wealth lead to higher consumption levels for several quarters. They also discovered that wealth directly influences spending, rather than just predicting future income changes. For households with moderate investments, every extra dollar in wealth results in a 5 to 15 cent increase in spending, with the most likely gain being on the lower end of this range.