Dealers work on the ground on September 17, 2025 on the New York Stock Exchange in New York City, USA.
Brendan McDermid | Reuters
The stock market growth, which appears insensitive to tariffs, politics and a moribund job image, runs consumer expenses and puts a soil under an economy that many have expected that they have now fluctuated on the sidelines of the recession.
Economic data this week painted a surprisingly bright picture of the latest trends.
Consumer expenses in August were stronger than expected and income. Companies and households continue to order big-ticket articles while inflation was relatively soft. Even housing construction showed signs of life, with new sales reaching a three -year high in August.
Previously, such trends through trillions of stimulus had been involved in both the congress expenditure as well as from low interest rates and liquidity injections of the Federal Reserve.
But the narrative now shifts towards the ever popular asset effect from Wall Street and a number of new heights in the most important stock indices despite high ratings.
“I think that is going on the jump on the stock exchange and the wealth effect,” said Mark Zandi, chief economist at Moody’s Analytics, on Friday on CNBC. “I think all expenses come from the wealthy households with a high incomes with a high network that see that their stock portfolios are in operation, and they feel much better and they spend.”
In fact, the market has increased a stair step higher this year, which was undoubtedly increased by massive AI expenses, but also thanks to the strength in large industrial companies and communication giants. The Dow Jones Industrial Average has increased more than 9%, while the technically oriented NASDAQ composite has increased by 23%.
Stock Diagram -iconstock -Igram -Symbol
Dow and Nasdaq
Consumers are almost always happier when the stocks have expired and unemployment is low, as is currently the case. The feeling this year, as measured by the University of Michigan, has decreased by 23% since January when President Donald Trump took office.
A double -edged sword
The Michigan advertisement fell by 5.3%in September, although the surveying manager Joanne HSU found an anomaly: “Mood for consumers with larger shares in September, while for those with smaller or no participation.”
This makes sense to consider that the stock market has set a number of new records this month. According to St. Louis Fed data, the top -10% of earners in the USA are 87% of the market that the owners of assets have the reason to be satisfied.
According to Zandi, this is also a reason why the economic strength could be built on sand.
“The economy is very vulnerable if the stock market turns south for some reason,” he said. “People see red on their screens and not green on their screens, and the savings rate does not increase. The recession is in the current context of working growth.”
Causes regarding the stock exchange primarily focus on reviews The S&P 500 Currently expected from a win for the next 12 months with 22.5 times, far beyond the five (19.9) and 10-year (18.6) trends (18.6).
Only a few recession prints show in recent economic data.
Consumer expenditure in August rose by 0.6%, according to the figures of the trade department published on Friday, better than expected. Inflation expenditure rose by 0.4%, which indicates that consumers are still able to realize price increases.
In inflation, the annual rate is still well over the 2% goal of the Fed, with the core of 2.9%. However, the monthly increases correspond to earlier trends and the Wall Street forecasts, so that the Fed for an October installment reduction and possibly different when it meets again in December.
“The economy has continued to surprise the upward trend, and despite the negativity that is captured in surveys and expressed by commentators, acts continue to spoke Lauter as words and consumers. Therefore, the company gains continue to surpass the expectations,” said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.
More good news, more danger
There were other good economic news this week too.
The gross domestic product grew in the second quarter with an annual pace of 3.8%, according to a revision on Thursday, which was half a percentage point higher than before. Here, too, the reason for the surprise of the upward trend was that consumer expenses were considerably stronger than the previous estimate. In addition, the Atlanta Fed increased its GDP tracking estimate for the third quarter and increased the expected growth rate to 3.9%or a percentage point of 0.6 percent over the last update a week ago.
In addition, long -lasting orders of goods rose unexpectedly, while sales with the new home rose by 20%. Everything that came a few weeks ago as an increase in unemployment claims turned out that the layoffs were low, although the growth of wage and salary statements was at best static.
Even if it primarily consumers at the top of the upper end, the macroeconomic numbers are at least a story of stability.
“If people feel pessimistic about the nearby administration, they start in close -up competence, but that has not yet been the case,” said Elizabeth Tenant, Senior Economist at the Nerdwallet consumer town. “In fact, the strength of the consumer is attributed to keep the economy strong in recent years despite high inflation in recent years [interest] Prices and great uncertainty. “
However, tenants also noticed the edge of the knife on which the economy is sitting, and a large part of the consumers who do not join the stock market party and feel depressed, and the overall level of mood in accordance with the recessions.
“Prosperity offers a certain insulation from the perceived economic volatility, and investors have largely made themselves well,” she said. “Consumers are on the current economic risks-inflation and labor market weakness. This could be due to first-hand experiences.
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