Return of the "wealth effect" worked. Since the holding of shares in American homes is 16.9 billion dollars, an increase of 15% in the Dow Jones or S & P 500, representing an increase of family wealth of around 2.5 billion dollars. This means that every $ 100 of additional wealth, with consumption rising about 4 dollars, for which, 2.5 billion dollars of additional wealth increase of $ 100 billion consumption. So clearly shows the above dimensions, strictly coincide with the collapse of household savings and the resulting increase in consumption. As the income of American families after taxes is about 11.5 billion dollars, a drop of 1% in the savings rate-that is what happened, "implies an increase in consumption of 115,000 million, equivalent to time, the increase in consumption leads to increasing wealth as a result of the increase observed in the period, when one compares consumption and Dow Jones / S & P 500.
not seem obvious that in 2011 the stock market continue to rise at the rate of 2010 and, when completed this summer the "quantitative easing ", I can not imagine a Fed that continues its massive purchases of Treasury bonds.
No increase in leading indicators of stock market- Dow Jones and S & P 500 - the "wealth effect" will be neutralized, and savings will affect the growth rate of consumption, and consequently the GDP.
Growth 2010, coincided with a new bubble in the stock market, rather than a recovery of U.S. real economy. As I said in November 2010 - see note "Veranito ..." - Sales of Thanks Giving and Christmas, did not seem enough incentive to get my hopes with a increased household spending and business in 2011. In February, housing prices continue to fall and the labor market remains very weak, the world needs to see sustainability in the growth of the largest world economic power. If not, investors must make decisions toward the second half, and surely provoke turmoil in the midst of international political environment strained by the events of North Africa.
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