{"id":2074,"date":"2025-10-20T04:04:43","date_gmt":"2025-10-20T04:04:43","guid":{"rendered":"https:\/\/blog.cedritech.com\/?p=2074"},"modified":"2025-10-20T04:04:43","modified_gmt":"2025-10-20T04:04:43","slug":"top-of-my-list-of-worries-why-the-stock-markets-boom-could-become-americas-biggest-risk","status":"publish","type":"post","link":"https:\/\/blog.cedritech.com\/?p=2074","title":{"rendered":"\u2018Top of my list of worries\u2019: Why the stock market\u2019s boom could become America\u2019s biggest risk"},"content":{"rendered":"

The economy\u2019s biggest risk may not be\u00a0tariffs\u00a0or\u00a0private credit\u00a0but the stock market itself, where roughly $9 trillion in equity gains over the past year have powered high-income spending that could quickly reverse if portfolios start flashing red instead of green.<\/p>\n

\u201cThe surge in stock prices is so key to the well-to-do who are driving consumer spending,\u201d Mark Zandi, Moody\u2019s Analytics chief economist, told Yahoo Finance on Friday. \u201cIf that gets turned into reverse and we see stock prices decline, then that\u2019s the real threat to the economy in my mind.\u201d<\/p>\n

Moody\u2019s estimates the top 10% of earners account for about half of all consumer spending, a dynamic that\u2019s kept growth steady even as inflation and tariffs bite lower-income households. That link between spending power and market performance has become increasingly evident amid fresh market swings.<\/p>\n

US stocks\u00a0rose on Friday\u00a0as President Trump eased fears of a further trade escalation with China, rebounding from Thursday\u2019s steep losses sparked by renewed worries over private credit. Regional banks, including Zions (ZION) and Western Alliance (WAL),\u00a0also recovered\u00a0after reports of fraudulent loans and mounting credit stress added to investor jitters against the backdrop of a prolonged government shutdown.<\/p>\n

Still, Zandi said those risks pale next to what\u2019s building in financial markets, where a sharp reversal could quickly shake the confidence of the wealthy households powering US growth.<\/p>\n

\u201cOf all the risks out there, from what\u2019s going on in the banking system to the government shutdown and everything else, that\u2019s the one that\u2019s at the top of my list of worries,\u201d he said.<\/p>\n

\u201cI\u2019m more sanguine about the banking system,\u201d he added. \u201cI\u2019m less sanguine about financial markets. Valuations are high. …Everything feels a bit juiced<\/a>, overvalued, bordering on frothy.\u201d<\/p>\n

Zandi warned\u00a0that froth\u00a0is directly tied to the same high-income households driving US consumption. That means if market gains unwind, the very group propping up spending could quickly pull back.<\/p>\n