$7 Trillion Stock Rally Adds $53 Billion Spending as Top 20% Capture 75%
Updated
Updated · Real Economy Blog · Jun 22
$7 Trillion Stock Rally Adds $53 Billion Spending as Top 20% Capture 75%
1 articles · Updated · Real Economy Blog · Jun 22
Summary
$53 billion in consumer spending has been generated by the recent $7 trillion equity rally, equal to roughly 0.25% of personal consumption and about 30 basis points of GDP.
Less than 1 cent of spending comes from each $1 of stock gains—about 0.8 cents—making equities a weak consumption channel compared with housing wealth, which carries a 5.15-cent propensity.
The top 20% of earners receive 75% of the rally's wealth-effect spending because they hold 87% of corporate equities and mutual funds, even though their per-dollar spending response is lower than the bottom 80%'s.
That concentration exceeds estimates that the top quintile accounts for 36% to 57% of overall consumer spending, reinforcing rather than offsetting the K-shaped split in the U.S. economy.
The analysis says the full spending effect may not peak until late 2027, leaving policymakers and businesses facing an economy still reliant on affluent consumers while broader spending momentum weakens.