Stock Market Momentum Fuels U.S. Economy Amid Jobs Stagnation and Political Uncertainty

Households and corporations continue to drive economic activity through sustained purchases of big-ticket items, with inflation remaining subdued. The housing sector outperformed expectations as new home sales reached a three-year peak. Unlike previous cycles fueled by fiscal stimulus and accommodative monetary policy, current growth stems from Wall Street's record-breaking performance and the resulting wealth effect.

"The spending surge clearly correlates with the stock market rally and its wealth effect," observed Mark Zandi, Moody's Analytics chief economist. "High-net-worth individuals are deploying gains from appreciating portfolios into the real economy."

Equities have demonstrated remarkable resilience throughout the year, buoyed by artificial intelligence investments and strong performances from industrial and communications titans. The Dow Jones Industrial Average has climbed over 9% year-to-date, while the Nasdaq Composite boasts a 23% gain.

Despite favorable market conditions and low unemployment, consumer sentiment paints a contradictory picture. The University of Michigan's index has plunged 23% since January, with September showing a 5.3% monthly decline. Survey director Joanne Hsu noted the divergence: "Sentiment remained stable among investors with substantial stock holdings but deteriorated markedly among those with minimal or no market exposure."