After rising about $9 trillion in 2024, household equity wealth could fall by $3 trillion during the first quarter, Seeking Alpha reported Monday (March 24), citing Bank of America strategist Michael Hartnett.
Hartnett attributed the expected drop to fiscal, monetary and trade policy being hawkish, and the yield curve being set to invert, according to the report.
The Wall Street Journal reported Monday that a U.S. decision to limit the range of tariffs it will impose next week amounted to less than the worst-case scenario investors had feared, although the measures will still deliver a shock to world trade.
U.S. stock benchmarks moved higher Monday, led by the tech sector, after weakness due to uncertainty about President Donald Trump’s trade policy, according to the report.
Trump’s planned tariffs are now expected to be more targeted than previously forecast, the report said.
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It was reported March 16 that stock market turbulence raised concerns among economists that consumer spending could be impacted because the top 10% of American earners have in the last four years boosted spending by 58%.
In addition, the stock market is seeing record participation and contributions to 401(k) plans by wage earners.
At the close of 2024, the share of American households’ financial assets that were in stocks reached the highest level on record, at 43%.
Together, these trends raised worries that a severe stock market collapse could lead Americans to reduce spending on things like vacations and new apparel.
It was reported March 12 that a selloff in the stock market could have repercussions beyond Wall Street as a decline in the “wealth effect” that has been fueled by stock market gains could lead investors to pull back on their purchases.
If those investors cut their spending after seeing losses in the stock market, the pullback could impact Main Street as well.
The volatility came at a time when there are more retail investors in the market, and they can check the value of their investments at any time.
