In 2024, the US economy experienced a remarkable recovery from the COVID-19 pandemic, leading to renewed enthusiasm across the country. The Dow Jones Industrial Average reached unprecedented highs, closing at 37,903, while the Nasdaq composite also hit a record of 15,605. This positive performance in the US equity markets indicated that the economy was heading in the right direction.
The driving force behind this economic resurgence has been affluent Americans rather than the middle class. Affluent Americans who invested in government bonds received higher yields compared to others in 2024. This trend of affluent Americans steering the economy is likely delaying rate cuts by the Fed.
Affluent Americans are thriving from rising home values and increasing income across various sectors such as government bonds, commodities, and stocks. This trend has given rise to what is commonly known as the “wealth effect,” where increasing home and stock values increase confidence and encourage higher spending, despite predictions of a significant economic slowdown.
With substantial gains in stocks, commodities, and the US dollar, affluent Americans are crucial to driving growth in 2024. Their success is vital to maintaining stability and growth of the economy. If affluent Americans continue to prosper, it will serve as an excellent tailwind for further economic expansion. Overall, their prosperity is a critical factor in ensuring continued growth for the US economy.