In 2024, the US economy experienced a remarkable recovery from the COVID-19 lockdown, leading to renewed optimism across the country. The Dow Jones Industrial Average reached unprecedented highs, closing at 37,903, while the Nasdaq composite also hit an all-time high of 15,605. This outstanding performance in the US equity markets signaled that the economy was moving in a positive direction.
The driving force behind this rapid growth has been affluent Americans rather than the middle class. Affluent Americans who invested in government bonds received higher yields compared to others in the same year. This trend is likely contributing to the delay in rate cuts by the Fed.
Affluent Americans have benefited significantly from rising home values and growing income from various sectors such as government bonds, commodities, and stocks. This trend has fueled what’s known as “the wealth effect,” where increasing home and stock values boost confidence and encourage higher spending, defying expectations of a sharp economic slowdown.
With substantial wealth gains in stocks, commodities, and currencies, affluent Americans are crucial to driving the US economy forward. Their success is critical for ensuring stability and growth in the economy. If affluent Americans do not continue to make money, there is a significant risk of crashing the US economy.
Overall, their prosperity serves as a vital tailwind for US economic growth.