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The thing is, people make purchasing decisions based on their paper wealth. They use it to plan their retirement, or decide their price range for a new house.
by superb-owl 4y ago
The thing is, people make purchasing decisions based on their paper wealth. They use it to plan their retirement, or decide their price range for a new house.
Shrinking household wealth destroys confidence in the economy, and can lead to a serious feedback loop.
- the_arcadian 4y agoExactly. It shows up the most in discretionary big ticket purchases. When the market's down you'll buy the same number of bags of doritos as you used to, but you're more reluctant to buy a new car or redo your kitchen.
- pessimizer 4y agoNot for you, but for lurkers: https://en.wikipedia.org/wiki/Wealth_effect https://en.wikipedia.org/wiki/Wealth_effect