It’s getting harder to separate the stock market from the economy. That means the Fed and Congress have more incentive to help Wall Street

After huge rallies or selloffs, it’s often pointed out that the stock market is not the economy, or that Wall Street is not Main Street. But that divide is getting blurrier. That’s because higher asset prices are spurring consumers to spend more freely than before, and consumption represents about 70% of GDP. In fact, this so-called wealth effect has become more potent in just the past 15 years. Today, every 1% increase in stock wealth translates to a 0.05% uptick in consumer spending, according to a not ...