XPost: alt.politics.economics, talk.politics.guns, alt.fan.rush-limbaugh   
   XPost: sac.politics   
   From: zinn@reno.us   
      
   Falling stock markets have wiped out more than $9 trillion in wealth from   
   U.S. households, putting more pressure on family balance sheets and   
   spending.   
      
   Americans’ holdings of corporate equities and mutual fund shares fell to   
   $33 trillion at the end of the second quarter, down from $42 trillion at   
   the start of the year, according to data from the Federal Reserve. With   
   major market indexes falling even further since early July, and the bond   
   market adding further losses, market experts say the current wealth losses   
   from financial markets could total $9.5 trillion to $10 trillion.   
      
   Economists say the drops could soon start rippling through the economy,   
   adding pressure to Americans’ balance sheets and possibly hurting   
   spending, borrowing and investing. Mark Zandi, chief economist of Moody’s   
   Analytics, said the losses could reduce real GDP growth by nearly 0.2   
   percentage points over the coming year.   
      
   “The loss of stock wealth suffered to date, if sustained, will be a small,   
   but meaningful headwind to consumer spending and economic growth in coming   
   months,” Zandi said.   
      
   The wealthy are bearing the largest losses, since they own an outsize   
   share of stocks. The top 10% of Americans have lost over $8 trillion in   
   stock market wealth this year, which marks a 22% decline in their stock   
   wealth, according to the Federal Reserve. The top 1% has lost over $5   
   trillion in stock market wealth. The bottom 50% have lost about $70   
   billion in stock wealth.   
      
   The losses mark a massive and sudden reversal for shareholders who saw   
   record wealth creation from soaring stocks since the pandemic. From the   
   market lows of 2020 to the peak at the end of 2021, America’s stock wealth   
   nearly doubled, from $22 trillion to $42 trillion. The bulk of that wealth   
   went to those at the top, since the wealthiest 10% of Americans own 89% of   
   individually held stocks, according to the Federal Reserve.   
      
   With stocks declining, and with those at the top bearing most of the   
   losses, wealth inequality has fallen slightly this year. The top 1% owned   
   31% of the nation’s household wealth at the end of the second quarter,   
   down from 32.3% in the beginning of the year. The share of wealth held by   
   the top 10% slipped from 69% to 68%.   
      
   While Americans have gained wealth from rising housing prices, the gains   
   have been more than offset by stock market losses. America’s housing   
   wealth rose by $3 trillion in the first half of the year to $41 trillion.   
   The gain is only about a third of the amount lost in the stock market. Yet   
   with rising mortgage rates, home prices have started to decline or cool in   
   many markets.   
      
   The drop in stock wealth also far exceeds the $6 trillion in quarterly   
   stock losses during the beginning of the pandemic in 2020. While stock   
   markets have seen larger drops on a percentage basis, this year’s stock   
   losses are among the largest ever on a dollar basis.   
      
   The big question is how much the stock declines will impact consumer   
   spending. So far, there are few signs that affluent consumers have cut   
   their spending. Yet some say the “negative wealth effect ” — the theory   
   that wealth declines lead to spending declines — could soon start to bite,   
   especially if market declines continue.   
      
   Zandi said lost stock wealth in the U.S. could reduce consumer spending by   
   $54 billion in the coming year. Yet he added that the “stock-wealth   
   effect” is smaller that in the past, since the wealthy own such a large   
   share of stocks and have “have substantial excess saving built up during   
   the pandemic.”   
      
   “Since their saving cushion is so large, they won’t feel as compelled to   
   save more given the decline in their stock wealth,” he said.   
      
   https://www.cnbc.com/2022/09/27/stock-market-losses-wipe-out-9-trillion-   
   from-americans-wealth-.html   
      
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