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Wealthy people have been driving an increasing share of consumer spending over the last year. That’s largely because asset values have been increasing, encouraging wealthy people to keep spending money.
Consumers enjoying a buoyant stock market and high house prices may feel inclined to spend more, but how much more is uncertain.
It’s called the wealth effect: Household spending decisions tend to be influenced by the ups and downs of asset prices.
When we feel wealthy, we spend more. It’s called the wealth effect.
