The wealth effect is a phenomenon that has been observed in the United States, where older Americans are playing a significant role in boosting the economy by increasing spending. As home and stock prices rise, portfolios and savings accounts also grow, giving many Americans the confidence to spend more on entertainment and travel.
According to Raymond Hill, an emeritus professor at Emory Business School, Americans are traveling to Europe without worrying about high mortgage rates because they are not borrowing money to buy houses. This increased spending is one of the reasons why the economy has not slowed down as predicted by many. Dr. David Biera