Report: Stock Market Selloff Could Impact High-Income Earners’ Retail Spending

A selloff in the stock market reportedly could have repercussions beyond Wall Street.

Investors tend to be the high-income Americans who have been driving consumer spending in recent years, and a decline in the “wealth effect” that has been fueled by stock market gains could lead them to pull back on their purchases, Bloomberg reported Wednesday (March 12).

The S&P 500 closed Tuesday (March 11) down 9.3% from an all-time high reached Feb. 19, according to the report. The plunge came after the S&P 500 gained more than 20% in both 2023 and 2024.

The drop also came at a time when there are more retail investors in the market, when they can check the value of their investments at any time and when trading is easier and more accessible, per the report.

The stock market’s troubles directly impact the high-income investors who have also been buying retail goods over the last few years while many low-income consumers have been more restrained in their spending due to inflation and high interest rates, according to the report.

If those investors cut their spending after seeing losses in the stock market, the pullback could impact Main Street as well, per the report.

The University of Michigan’s Surveys of Consumers reported Feb. 21 that February saw consumer sentiment decline 9.8% month over month and 15.9% year over year.

The survey found that the drop was driven by concerns that tariffs will lead to higher prices. It also found that the decrease in sentiment was unanimous across groups by age, income and wealth.

PYMNTS CEO Karen Webster wrote in a Tuesday (March 11) column that when economic conditions tighten, high earners may pull back on their spending in the same way low-income households do.

“Consumers across all income brackets are likely to pull back on spending, but for different reasons,” Webster wrote. “Those with savings cushions may voluntarily push pause on spending until they have more certainty in order to preserve cash and income, while those without financial shock absorbers in the form of savings will be forced to cut back out of necessity.”

The post Report: Stock Market Selloff Could Impact High-Income Earners’ Retail Spending appeared first on PYMNTS.com.