Ultra-rich individuals now possess the key influences on the economy—shift one, and global growth decelerates

Moody’s Investors Service has cautioned that the global economy is becoming increasingly reliant on the financial actions of the ultra-rich, warning that changes in sentiment among high-net-worth individuals could set off a recession. This view forms part of a wider review of vulnerabilities and threats facing international markets in the aftermath of the pandemic.

According to

, the economic influence of the wealthy far outweighs their numbers, with their spending and investments serving as major drivers of economic activity. Sectors such as luxury goods, upscale property, and private equity are particularly sensitive to the confidence and liquidity of this elite group. If global conditions worsen or geopolitical uncertainties increase, these individuals may become more conservative, potentially slowing demand and investment in ways that ripple throughout the wider economy.

This warning is in line with other recent Moody’s reports, which have noted deep-seated weaknesses in various sectors, including higher corporate debt, the difficulties of transitioning to new energy sources, and inherent risks within the private credit sector. The fact that a small group holds so much economic power only heightens these concerns.

The agency pointed out that the private credit sector has expanded quickly, enabling asset managers to broaden their holdings and influence, especially in America’s mid-sized business market. However, the rise in borrowing, lack of transparency, and industry concentration are prompting fears of possible spillover risks within the financial system. Moody’s noted that business debt is climbing, and non-bank lenders have become increasingly significant in providing financing, which has made the financial risk landscape more complex and opaque.

Adding to these economic challenges is the exposure of public pension funds to private market assets, which tend to be less liquid and more volatile than conventional investments. Moody’s has highlighted that such investments represent a greater risk for pension funds compared to insurers, particularly if asset values drop sharply or liquidity becomes scarce.

On a macroeconomic level, high-frequency indicators still show ongoing supply-side issues, such as shipping bottlenecks and shortages of crucial materials. When combined with tighter financial conditions and falling confidence among consumers and businesses, these pressures are creating a complicated barrier to worldwide growth.

Moody’s further underlined that Europe, and especially the UK, faces its own set of vulnerabilities. British households are among the most financially stretched in the region due to rising prices and interest rates. Even though higher inflation has only a limited direct effect on European residential mortgage-backed securities, the knock-on impact on household consumption and investment choices may intensify wider economic slowdowns.

Given the ongoing fragility of the world economy, Moody’s analysts are urging policymakers and market players to pay close attention to the financial behavior of the ultra-wealthy. The agency pointed out that a rapid decline in confidence among the very rich could serve as an early sign of larger economic problems, affecting asset values, consumer activity, and overall stability.