I think the point about household wealth in this context relates only to investable dollars. A great deal of dollars aren't likely to sit in passive cash - they're going to be spent or invested, mostly likely the latter when it comes to the bigger portion. This is what is driving asset prices and putting such a tailwind in securities. It's hard to see how a true correction is possible when selloffs trigger buying in the algorithms that control when many EFTs, MFs, and other investment vehicles buy, and they have so much buying power that it creates really strong price support. It's also driving home prices, second home markets, art and other investment-grade asset prices.
There's really too much money out there actually, at least from the perspective of healthy dynamics - like you point out, hundreds of millions of investable dollars sitting on the sideline waiting to invest don't mean that companies are going see higher revenues. The investment economy and the actual economy can be divergent with these forces in action. The worst part is that those massive hordes of money aren't distributed across the economy in any sort of healthy way - they are concentrated in a relatively small minority. And the hunger for investment drives other unhealthy forces, such as REITs and other real-estate investment vehicles that are wreaking havoc on the US housing situation, which is becoming dire in many locations.