In recent years, older Americans have been playing a vital role in the U.S. economy by contributing to rising home and stock prices. This has led to an increase in their financial security, giving them the confidence to spend more on things like entertainment and travel. Despite high mortgage rates, they are not deterred from spending because they are not borrowing money to purchase a house.
The “wealth effect” is driving this increase in spending, which has helped keep the economy growing at a steady pace. The confidence that comes with financial security has led people to spend money on non-essential items without needing loans from banks. This type of spending is critical for keeping the economy strong, as it creates more disposable income for American households.
However, as the economy continues to grow stronger, there are concerns about sticky inflation caused by increased consumer spending on various goods and services. The rise in asset values has led to increased spending across various sectors, and this is influencing Federal Reserve policies. Professor Lonnie Golden believes that as long as people continue to spend on dining out, travel, healthcare, and pharmaceuticals, inflation rates are likely to remain stable.
In conclusion, older Americans are playing a crucial role in keeping the U.S. economy strong by contributing to rising home and stock prices. Their increased financial security has given them the confidence to spend more on non-essential items without needing loans from banks. However, there are concerns about sticky inflation caused by increased consumer spending on various goods and services due to the rise in asset values. As long as people continue to spend on dining out, travel, healthcare