Long-expected reverse wealth effect may become reality but it still isn't clear what its impact may be
For months, economists have been waiting for the US economy to feel the impact of the 'reverse wealth effect' that was supposed to have resulted from the past year's stock market slide. The stock boom of the 1990s enriched American households, launching consumers on a prolonged spending spree. When the market turned down last year, consumers should have pulled in their horns. They haven't, at least so far. 'For consumption, it seems as though the stock market decline never happened,' said Wall Street economist Albert Wojnilower. Americans usually stop spending and save more when the mar...
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