{"id":415447,"date":"2010-03-11T07:10:00","date_gmt":"2010-03-11T12:10:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/soaring-stock-market-and-housing-rebound-means-the-wealth-effect-is-back-2010-3"},"modified":"2010-03-11T07:10:00","modified_gmt":"2010-03-11T12:10:00","slug":"soaring-stock-market-and-housing-rebound-means-the-wealth-effect-is-back","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/415447","title":{"rendered":"Soaring Stock Market, And Housing Rebound Means The Wealth Effect Is Back!"},"content":{"rendered":"

\"happy<\/p>\n

Evidence continues to pile up that the economy is on the mend — jobs are being created, consumers are starting to spend again — even if it is just steroid or sugar-induced, and thus destined to end in another crash.<\/p>\n

One reason for this: the wealth effect is coming back.<\/p>\n

Kelly Evans at WSJ explains<\/a>:<\/p>\n

Spending growth has since resumed—a source of surprise and widespread skepticism given the steep contraction in consumer credit and the high 9.7% unemployment rate.<\/p>\n

The wealth effect, or the confidence boost that comes when people’s assets rise in value, helps explain this puzzler. Household net worth rose by about $5 trillion through September from its first-quarter trough, aided by the stock-market rebound and stabilization in home prices across much of the country. Thursday’s flow-of-funds report is expected to show a further increase during the last three months of 2009.<\/p>\n

Our guess is that the rebounding market has done a lot more for consumer confidence that the housing market, which, frankly, still remains in the toilet. On the other hand, that’s a reason to be optimistic. If that market turns around sometime in 2010, that’s another shot of “stimulus” for the consumer still bottled up.<\/p>\n

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