The stock market is driving the economy in one major way

The article argues that the U.S. stock market—especially the S&P 500 and AI-led megacap equities—is increasingly supporting consumer spending through a stronger wealth effect. BCA Research estimates equity wealth now has about double the impact on spending versus 1990, and household equity holdings have risen to roughly 250% of disposable income, up from less than half in the early 1980s. This has helped keep consumption resilient even as real disposable income has weakened, and may have helped the U.S. avoid recession since 2025. The article highlights that gains in AI-related stocks such as Nvidia, AMD, and Broadcom have been a major transmission mechanism from markets to the broader economy. The key market implication is that continued equity strength is supporting economic growth, but a slowdown or correction could force households to save more and reduce spending.