The US economy quickly recovered in 2024 from the COVID-19 lockdown slump leading to a fresh sense of enthusiasm across the country. The Dow Jones Industrial Average hit all-time highs this year touching 37,903 on Wednesday’s closing bell. The Nasdaq composite also touched 15,605 during the same period and the US equity markets are moving in the right direction in 2024.
Also Read: Not Technology, Finance Jobs in the U.S. Receives High Demand
However, it is the affluent Americans who are driving the US economy this time around and not the middle-class segment. Affluent Americans who purchased government bonds received higher yields than other contemporaries in 2024. The development is what’s likely delaying the Fed’s rate cuts this year.
US Economy: A Balancing Act From Affluent Americans
While the rising value of homes is causing trouble for the middle class, affluent Americans are enjoying the rewards. In addition, their income is growing in both the government bonds, commodities market, and the stock market alike in the US economy.
Also Read: The West Is Running Out of Gold, Demand in the East Grows Strong
The so-called wealth effect, “whereby rising home and stock values give people the confidence to increase their spending, is a big reason why the US economy has defied expectations of a sharp slowdown. Its unexpected strength, which is contributing to stickier inflation, has forced a shift in the Fed’s plans,” said Business Insider.
The affluent Americans have significant wealth through gains in stocks, commodities, and the US dollar. They are the ones that are driving the US economy and not the middle-class segment as a whole. The US economy could crash if affluent Americans are not making money in 2024.
Also Read: U.S. Dollar Batters 22 Asian Currencies in a Row
“People have had significant wealth gains in stocks, significant wealth gains in fixed income. Significant wealth gains in home prices, significant wealth gains even in crypto. All that adds up to still a very significant tailwind”, for the growth of the US economy, said Torsten Slok, Chief Economist at the Apollo Group to Business Insider.