The wealth effect impacts consumer spending as inflation and interest rates climb
Understanding the wealth effect Economists know that consumers spend more when their wealth increases, even if their income remains the same. However, if wealth decreases, the opposite occurs. The concept, known as the wealth effect, has spurred the economy for well more than a decade as savers’ 401(k)s and other retirement accounts increased year-after-year. At…
By Bill Schmick
May 26, 2022
Stock Market vs. Fed Rate Hikes in Volatile Market | Investor Pains
On June 15, 2022, the Federal Reserve’s Open Market Committee (FOMC) raised the federal funds rate to 1.65 percent. They vowed to “undertake open market operations as necessary to maintain the federal funds rate in a target range of 1.5-to-1.75 percent.” Let’s call it 1.75 percent for today’s discussion, which is in line with the…
By Allen Harris
June 27, 2022