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Wealth Effect?

Sigma Investment Counselors

April 6, 2017

It is clear that there have been significant increases in U.S. household wealth since the depths of the 2009 financial crisis, largely due to substantial increases in stock market and home valuations.  In the past, large gains in household wealth have stimulated higher levels of consumer spending.  This does not appear to be the case this time around.

What’s going on?

While there are no easy or definitive answers to this question, a number of factors seem to be in play:

Investors may want to consider the potential for some changes.  It currently appears that the rate of economic growth is trending upward and there is some evidence that wages have started to show signs of improvement.  While the rate of improvement is currently quite modest, the Federal Reserve has taken note and appears to be ready to embark on a series of interest rate increases.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA®


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