New York, NY – Consumer spending in the United States is poised to receive a boost due to the ongoing surge in the stock market. According to Capital Economics based in London, the resurgence in household wealth driven by the stock market rally and rising house prices is likely to result in increased consumer spending. Andrew Hunter, the deputy chief U.S. economist at Capital Economics, predicts that the continued growth in the stock market will propel household net wealth to new heights, fueling consumption growth gradually over the next few years.
In the first quarter, American household stock holdings saw a significant increase of $7 trillion, while total household net wealth, including home values, rose by $8.5 trillion. Capital Economics projects that household wealth will grow by an additional $20 trillion by the end of 2025, driven by an artificial intelligence-driven bubble and a 6% increase in house prices by the end of next year. Although this wealth may lead to increased spending, the firm anticipates that it will contribute to a steady acceleration in consumption growth rather than a sudden boom.
Investors are looking forward to the upcoming March jobs report from the Labor Department, with economists expecting the addition of 200,000 jobs last month. This figure would represent a decrease from the 275,000 jobs added in February. In addition to job gains, investors will be scrutinizing the report for any revisions to previous payrolls data and monitoring wage growth, with economists forecasting a 0.3% increase in average hourly earnings for March, up from a 0.1% jump in February.
Meanwhile, investor sentiment remains positive, with optimism staying above historical averages for the 22nd week in a row. Bullishness declined slightly but stayed above average, while bearishness remained below its historical average. Neutral sentiment increased, indicating that investors are cautiously optimistic about the market’s outlook in the coming weeks.
As the trading week nears its end, stock markets are facing losses, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all seeing declines. The Dow has dropped about 3%, on track for its worst week since March 2023, while the S&P 500 and Nasdaq have each slipped approximately 2%.
Looking ahead, Dow futures are showing minimal movement, with futures tied to the S&P 500 and Nasdaq 100 both edging up slightly. Investors will be keeping a close eye on market developments and economic indicators in the coming weeks to gauge the overall health and stability of the economy.