Consumer confidence is in the tank, and yet the latest data shows consumer spending is as high as ever.

What’s going on? One factor is the “wealth effect.” Millions of households have more home equity and gains in their stock market and retirement accounts than ever before thanks to the booming stock market.

More than 120 million Americans have 401k plans. More than two out of three households with incomes above $50,000 a year have money in the stock market.

The chart below shows that through the end of the second quarter of this year, the average 401(k) plan is up by almost $50,000 after adjusting for inflation in Trump’s five and a half years as president.

This follows a big decline in these plans during the high-inflation Biden years.