{"id":768773,"date":"2026-06-29T12:13:12","date_gmt":"2026-06-29T12:13:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/768773\/"},"modified":"2026-06-29T12:13:12","modified_gmt":"2026-06-29T12:13:12","slug":"the-stock-market-rally-thats-making-some-people-rich-and-everyone-else-miserable","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/768773\/","title":{"rendered":"The stock market rally that\u2019s making some people rich and everyone else miserable"},"content":{"rendered":"

\n The saving grace of this economy that everyone hates<\/a>: Wealthy Americans are keeping it afloat by spending \u2014 throughout tariffs, inflation<\/a>, war, you name it.\n <\/p>\n

\n The ugliest part of this economy: The wealth gap<\/a> between affluent and low-income households continues to widen, postponing or destroying the American Dream for millions hardworking folks.\n <\/p>\n

\n Underpinning both the best and worst parts of America\u2019s economy is the mindboggling stock market rally.\n <\/p>\n

\n It\u2019s a Catch-22 with no easy solution. But if the stock market rally that powers the divide fizzles out, the economy could take a significant beating.\n <\/p>\n

\n Despite near-record-low consumer sentiment, Americans of all stripes and income levels are spending at a faster clip this year than in 2025, according to Bank of America Institute\u2019s<\/a> monthly report on depositor data. But wealthy Americans are doing most of the heavy lifting: The top 20% of earners make up 57% of US consumer spending, according to the Dallas Federal Reserve.\n <\/p>\n

\n That\u2019s not only because they\u2019re richer and have more money (no kidding!); it\u2019s because of what kind of wealth they hold.\n <\/p>\n

\n Wealthier Americans are more likely to be homeowners, able to unlock significant equity from surging home prices in recent years \u2014 particularly if they bought or refinanced at sub-3% rates during the pandemic. The top 20% of earners own more than half of America\u2019s overall home value; just 3% of America\u2019s home value is owned by the bottom 20% of earners, according to the New York Federal Reserve.\n <\/p>\n

\n Another contributing factor: Wealthy Americans are significantly more invested in the stock market. The top 20% of earners control 87% of the wealth generated by America\u2019s individually owned stocks, according to the Federal Reserve\u2019s Distributional Financial Accounts<\/a>.\n <\/p>\n

\"The<\/p>\n

\n The S&P 500 has given investors a total return of 22% over the past year, 76% since 2023 and 327% over the past decade.\n <\/p>\n

\n Those massive market gains have persuaded stockholders to spend.\n <\/p>\n

\n \u201cShare price gains have been an important driver of spending on discretionary goods and services from older, wealthier households,\u202fwhich account for more than 50% of total spending in those categories,\u201d Michael Pearce, chief US economist at Oxford Economics, said in a note to clients last month.\n <\/p>\n

\n Because that market wealth is so concentrated among wealthy households, so too is the spending it generates: Three-quarters of spending created by the market rally flows through the top 20% of earners, according to Joe Brusuelas, chief economist at RSM US.\n <\/p>\n

\n Over the past year, the market generated $53 billion in spending, Brusuelas estimates. That\u2019s a lot of money \u2014 equal to about a seventh of the 2.1% annualized growth rate in US gross domestic product last quarter.\n <\/p>\n

\n The stock market gains that have helped keep the economy humming have exacerbated the yawning wealth gap. The big market gains have contributed to the perception of a lack of equity and fairness in the economy, sparking outrage among many middle- and low-income Americans.\n <\/p>\n

\n \u201cIf we are counting on the stock market to sustain the consumer economy, we are leaning on a channel that deepens the K-shape rather than offsets it,\u201d Brusuelas said.\n <\/p>\n

\n But if the opposite were true \u2014 if the market rally ended \u2014 it could make the economic situation significantly uglier for everyone.\n <\/p>\n

\"People<\/p>\n

\n \u201cIt\u2019s a K-shaped market, and it\u2019s a K-shaped economy,\u201d said Heather Long, chief economist at Navy Federal Credit Union. \u201cThe greatest risk to the economy is a downturn \u2014 and that risk is heightened when you have both of those Ks in play.\u201d\n <\/p>\n

\n A third of the S&P 500\u2019s value is made up of a single sector: tech. And nearly a fifth of the entire market\u2019s value is generated from chip stocks alone.\n <\/p>\n

\n No one expects the AI-fueled rally to implode anytime soon \u2014 there\u2019s real demand for the technology; this isn\u2019t the dot-com bubble. But because the market rally is at least partly responsible for generating the biggest spenders\u2019 wealth, if the rally were to end, it could unwind the incentive to spend, creating serious problems for the economy.\n <\/p>\n

\n \u201cIf we should have an event that causes a significant decline in equities, it creates conditions for a sharp retraction or a recession,\u201d Brusuelas said.\n <\/p>\n

\n The stock market is not the economy, but it matters for the economy. And because of the extreme concentration of wealth, the market\u2019s rally is much more significant to the economy than usual \u2014 for good and bad.\n <\/p>\n","protected":false},"excerpt":{"rendered":"The saving grace of this economy that everyone hates: Wealthy Americans are keeping it afloat by spending \u2014…\n","protected":false},"author":2,"featured_media":768774,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[45,49,48],"class_list":["post-768773","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-ca","tag-canada"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/768773","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=768773"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/768773\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/768774"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=768773"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=768773"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=768773"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}