Has AI stocks made consumers hostage

The article discusses the growing dependence of the U.S. economy on stock gains linked to the AI boom, primarily through household wealth estimated at over $34 trillion since late 2022, due to the rising value of investment holdings. Data indicates that nearly 40% of American consumption growth can be attributed to wealth effects resulting from rising stock markets, with wealth heavily concentrated among the wealthiest: the top 10% of households own about 85% of stocks. Although investment in artificial intelligence directly contributes to financial growth through spending on technology and infrastructure, a significant portion of the impact stems from the wealth increase that supports consumer spending. This reliance exposes the economy to risks of a sharp stock market downturn. Experts warn that a 20% decline in market assets could lead to reduced consumer spending and slower growth, especially if this coincides with rising borrowing costs and weakening real incomes, threatening the sustainability of relying on stock gains and the cycle of financial wealth to support the American economy.

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