Dollar bills fly out of a woman's wallet to illustrate shrinking wealth
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

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