Understanding Current Stock Market Trends: Are They Really a Good Predictor of Economic Health?
This blog was originally posted on RichardFunchess.net
Recent talk of the current state of the stock market has led many to boast of the current state of the economy. But are these two aspects of American economic health synonymous? Despite the two often used in tandem with each other, it is worth a deeper analysis of both to see if current stock market trends are indicative of greater, overall economic health.
While it’s true that long-term stock market data should be analyzed closely when looking at the long-term data of the American economic system, research tends to show otherwise when it comes to the ebb and flow of stock market trends.
Not Everyone Invests
The first thing to remember is that not everyone is an investor. Certainly, long-term stock market data is crucial for rising capital, business’ investing, and individuals accumulating wealth, but the truth is, the erratic nature of the stock market is tied neither directly to current economic health nor to the well-being of the American individual. In fact, a 2015 study showed that over half of Americans have no capital invested in stocks. If your job is directly working with the stock market, then it is likely that you pay attention to the minutia of the ebb and the flow. But for the average American citizen, the true well-being of the economy rests first on fundamental economic data.