The pros are buried in it. But how deeply is the falling market burrowing into consumer psyches? It’s an urgent question for policy makers trying to subdue inflation while guiding the economy to a soft landing.
University researchers Marco Di Maggio, Amir Kermani and Kaveh Majlesi have one way to quantify it. Their 2020 study says every dollar lost in stocks leads to a 3-cent reduction in spending. After the five-month selloff, that’s about $300 billion zapped this year. Americans have about $18.5 trillion in annual disposable income, strategists at Bloomberg Intelligence say.