Today’s weekly market commentary examines consumer spending relative to household wealth. With upper income households holding more stocks than ever before, rising market values are giving consumers more confidence to spend. More specifically, the piece looks at the disproportionate spending of upper income households, contributing to a “K-shaped” economy – where higher income households spend more freely while others remain more cautious.
The chart goes back to 2009 and runs through 2025. The chart plots the percent of net worth which is comprised of corporate equities and mutual fund shares for both the top 20% of households by income as well as the bottom 80% of households by income. The top 20% of households by income is represented by the purple line. The average of the top 20% of households by income is represented by the dotted purple line. The bottom 80% of households by income is represented by the red line. The average of the bottom 80% of households by income is represented by the dotted red line.
As can be seen from the data, and as the piece explains, “the top 20% of households by income saw the share of their net worth in the stock market (as represented by corporate equities and mutual funds) increase to 40% as of the third quarter of 2025. Related gains in household wealth have resulted in ‘dry powder’ for big-ticket spending. Meanwhile, this figure was significantly lower for the bottom 80% of households by income, with just 15% of their net worth derived from stock-market exposure.” – WFII Chart of the Week 02/10/2026
The concept of the “wealth effect” helped drive consumer spending in 2025, as shown by the data. The wealth effect is the notion that when households become wealthier, as a result of an increase in value of their assets, they spend more which then stimulates the broader economy. This theory plays out in 2025, as the top 10% of income earners, who saw their net worth grow as a function of market participation, were responsible for almost 50% of all consumer spending.
In terms of what this means for investors, the piece explains, “we expect another year of solid economic and earnings growth to sustain the rally in financial assets that, in turn, is powering gains in household wealth and perpetuating consumer spending skewed toward upper-income households.” – WFII Chart of the Week 02/10/2026
We would ask that you review the attached piece at your convenience and please let us know if you have any questions or if you would like to discuss it further. And as we always end this correspondence, please remember that regardless of current momentum and regardless of the key takeaways in this weekly perspective, we will continue to monitor and manage with a thoughtful approach based on your specific long-term objectives. Thank you for your continued confidence and look forward to speaking soon.
