The Wealth Effect Is The Only Consumer Left
Increasingly uncomfortable circularity
The US consumer is doing just fine — provided you own enough stocks. Beneath the aggregate resilience sits an increasingly uncomfortable circularity: spending is concentrated among households whose wealth is overwhelmingly tied to equities, while the equity market itself is increasingly concentrated around AI. Retail is piling into the same trade, even as traditional consumer baskets roll over. And here is the final twist: the jobs most exposed to AI are disproportionately the high-paying ones. The wealth effect is holding up the consumer. AI is holding up the wealth effect. And AI may eventually come for the consumer holding it all together.