Using the Stock Market to Measure the Economy’s Performance Is Fool’s Gold
The Trump administration and congressional Republicans keep saying that the record stock market is proof that their policies are working and that the economy is humming. So, let's look at who really benefits when stocks reach an all-time high. Here is a hint: It ain't you.
|
Listen To This Story
 |
On Saturday morning, Donald Trump touted the performance of the stock market in a social media post showing that the Dow Jones had hit a record high the day before. That is the economy he and Republicans want to talk about ahead of the midterms.
So let’s talk about it.
There are two ways to look at the economy.
According to the White House, the “soaring markets prove America First works,” and Trump’s “strong leadership, pro-growth policies, and robust protection of US industry have driven the stock market to record territory, creating trillions in new wealth for families, retirees, workers, and businesses.”
In fact, the administration seems to think that the Dow’s performance gives it a carte blanche.
For example, at a hearing earlier this year, then-Attorney General Pam Bondi famously responded that “the Dow is over 50,000 right now” in response to questions about her department’s (mis)handling of the Epstein files.
While Bondi is gone, the Dow is still just above 50,000, meaning that it hasn’t increased all that much over the past three months.
That being said, it is true that it is in record territory and that somebody is making trillions. But it’s not regular Americans.
And that makes using the stock market’s performance a highly misleading indicator of the economy’s performance.
According to data from the Federal Reserve, the bottom 50 percent of Americans* own about 1 percent of stocks and mutual funds, which are worth about $600 billion in total. However, since a lot of that money is tied up in 401(k) accounts, they can’t even get to it without paying significant penalties.
Conversely, the top 1 percent own $29 trillion in stocks, which is 50 percent of the total.
That is who is getting rich(er) when the Dow Jones or the S&P 500 hit records, and those are the people the Trump administration is working for.
It’s not regular Americans, who are feeling the pain from tariffs and the president’s war with Iran.
In fact, according to a Brown University tracker, they have been forced to shell out an extra $45 billion just in fuel costs since the conflict began, i.e., the equivalent of 7.5 percent of all of the stocks and mutual funds the bottom half owns.
And that brings us to the economy regular Americans live in… the one in which they have to cut corners and go into (more) debt to make ends meet in the face of rising prices that Trump’s policies accelerate.
Sure, the average person got a tax refund that was $350 higher than the previous year, but that money is long gone, and Republicans have done little else to address the affordability crisis.
But at least the stock market is doing great, in large part thanks to the artificial intelligence bubble that is going to make a few people insanely wealthy on the way toward ruining the lives of millions.
So, the next time somebody tries to use the performance of the stock market as an indicator of how well the economy is doing, you know that they are either a fool or one of the people at the very top who are benefitting from the plight of everybody else.
* First of all, you should really look at this chart. And, if you can’t find the bottom 50 percent, it’s that tiny beige sliver at the bottom. Also, if you are wondering where you fit into the wealth spectrum, if you own less than $192,000 in total assets, i.e., all your money, your stocks, and the value of your home minus what you owe to banks, mortgage and credit card companies, then that means you. If you own $100,000 more than that, you are already in the top 40 percent. You need half a million to be in the top 30, and if you own any more than that, please make a donation here.
