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Solid Consumer Spending Defies Stock Market Influence.
15 Oct
Summary
- Consumer spending remains strong across the board, not solely stock market driven.
- Most consumer spending originates from the bottom 90% of income earners.
- AI's rapid growth is cited as a potential cause for economic overheating.
Consumer spending in the United States demonstrates consistent strength across all income levels, according to Austan Goolsbee, president of the Federal Reserve Bank of Chicago. Goolsbee emphasized that approximately 75% of consumer spending comes from the bottom 90% of the income distribution, indicating that the robust spending figures are broadly based.
He suggested that if the stock market were the primary driver, a more pronounced "K-shaped" economic dynamic would be evident, with greater disparities in spending between the top 10% and the rest of the population. While acknowledging that increased wealth from stock market gains contributes somewhat, Goolsbee highlighted concerns about potential economic overheating.
Specifically, Goolsbee pointed to the rapid growth in Artificial Intelligence and related data center construction, particularly in the Midwest. He noted that the intense demand for AI infrastructure is driving up input costs and construction expenses, creating backlogs and a sense of an economy operating at or beyond its capacity. This situation necessitates vigilance regarding inflationary pressures.
