Goldman Sachs says the falling stock market has super rich people spending less on yachts, jewellery and private jets
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- The super rich are spending less on yachts, jewellery and private jets thanks to recent falls in the stock market, Goldman Sachs says.
- "We find large effects of the stock market on luxury spending," Goldman economist Daan Struyven wrote on Wednesday.
- Struyven says his team's analysis is consistent with a "substantial" negative wealth effect on a measurement called the personal consumption expenditure.
He says he expects that PCE measurement to drop up to 2.5% this year "despite healthy labor income growth, an elevated saving rate, and cheaper oil.""Equity holdings as a share of income have risen substantially for the middle, upper-middle and upper wealth groups," he wrote."Therefore, the hit to the wealth level from a 1% decline in stock prices is now about three times larger than in the late '80s for the top 10% of households, and a third larger for those in the 50-90th percentiles."
While stock ownership is usually concentrated among the rich, theories abound to the relationship between the stock market and the economy.Bloomberg, for example, pointed out a caveat to Goldman's take, saying that the National Bureau of Economic Research in 2013 found "at best weak evidence of a link between stock-market wealth and consumption." The housing market has more of a wealth effect, it said.
Get the latest Goldman Sachs stock price here.
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