Investing.com -- Wolfe Research has identified the wealth effect as a "key mega theme" underpinning U.S. economic momentum, arguing that its impact on consumer spending is being underappreciated by investors who have focused primarily on the AI buildout as the main growth driver.

Analyst Chris Senyek told investors that the U.S. economy is running hot, with real-time indicators pointing to roughly 3% real growth supported by an AI buildout contributing upward of 40% to GDP, the wealth effect, and tax stimulus from the One Big Beautiful Bill.

The May ISM Manufacturing survey is said to have reinforced the picture, showing expansion for the fifth consecutive month, with the New Orders component continuing to signal Early Acceleration in Wolfe Research's U.S. Market Cycle Framework.

On the wealth effect specifically, Senyek argued that "investors shouldn't ignore the implications of the wealth effect on spending," pointing to equity markets at all-time highs and a high-end consumer that continues to support overall expenditure.

"The top 40% of earners in the U.S. own 94% of equities," wrote Senyek, highlighting the link between market gains and real-economy spending.

Housing wealth adds another dimension. Wolfe Research noted that $16 trillion in housing wealth has been added since the COVID-19 pandemic, with the top 40% of earners owning roughly 75% of that stock, providing an additional spending cushion for the cohort most likely to consume discretionary goods and services.

Wolfe Research said it would buy discretionary service companies leveraged to falling gasoline prices.