In the past election, politicians often painted the economy in 2 different ways – one was reasonably good, the other was not good. It seems both were correct, it dependent on where you were in the income spectrum.

In an article by Christopher Rugaber of the Associated Press, why? despite higher prices, have Americans kept spending at retail stores and restaurants at a robust pace?

One of the key reasons is wealthier consumers boosted by strong gains in income, home equity and the stock market have been spending more of their money.

The Federal Reserve suggests if that consumer spending, the primary driver of the American economy, could help sustain healthy growth this year and next.

Lower-income families have been disproportionately squeezed by higher rent, groceries and other necessities leaving them with less disposable income than before the pandemic.

The Federal Reserve noted inflation-adjusted-spending rose 3% in 2022 and 2.5% in 2023. For the quarter between April and June, spending was up 2.8%.

The Federal Reserve reported the value of housing increased 70% from the first quarter of 2020 to the second quarter of 2024 to $17.6 trillion. Stock market and mutual funds increased 86% to $37 trillion.

One sign of struggles for the lower-income consumers is the proportion of borrowers who are behind on credit cards or auto loans have risen in the past 2 years to the highest level in a decade.

Linking to dividend paying stocks, anyone who owns some will have more disposable income that is very good position to be in. In the economy, it is always very good to have choices and for monetary choices they often come over the long term. Investing allows compound interest to take care of the gains and as your wealth increased, hopefully you had managed your spending expectations. Many financial planners will tell clients at some point you can spend if you want to, rather than not spend, there are many ways to spend, but it is harder to earn. In all economies there are conflicting stories and with dividends you can decided to reinvest, buy something else or take the money out of the market to spend elsewhere and those are good choices to have.

There are more questions than answers, till the next time – to raising questions.