The Stock Market is Not the Economy

Status
Not open for further replies.
Yeah the Conference Board announced last week that the recession officially started in February, well before any of the lockdowns.
 
Helen said:
I have to disagree that the economy was soaring before the shutdown. The yield curve inverted last summer (not a positive sign) and more importantly, manufacturing data was showing a slow down.

"Manufacturing activity continued to lag in November amid a decline in inventories and new orders, according to the latest ISM Manufacturing reading released Monday.
The reading came in at 48.1 vs. an expectation of 49.4 and the previous month’s reading of 48.3.

Though the level is usually reported as a simple number, it actually denotes the percentage of manufacturers planning to expand operations. A reading below 50 represents contraction; November was the fourth straight month below the expansion level."

https://www.cnbc.com/2019/12/02/ism-manufacturing-november-2019.html



I saw help wanted signs up all around Portland, the problem was no one could afford to take the jobs because they weren't paying living wages.
Click to expand...

What were they living on that made a $15 hr job look unaffordable?
 
Last edited:
audreyh1 said:
Recessions start at a peak.
Click to expand...

We had a shock to the economy from the pandemic. If you are claiming that a recession was imminent in early February without the pandemic, you are rewriting history. More likely that the US economy would have continued to improve on the heels of the phase one China trade agreement (without a global pandemic).
 
I didn’t make any claim. NBER announced that as the peak of the prior business cycle which is how they denote the beginning of a recession.
 
audreyh1 said:
I didn’t make any claim. NBER announced that as the peak of the prior business cycle which is how they denote the beginning of a recession.
Click to expand...

That is interesting and I do not dispute that a recession could be defined in that way.

The context of my comments, however, was in regards to the state of the US economy prior to the effects of the pandemic. I contend that the economy was doing well and likely would have done even better. A recession certainly would not have occurred over the past few months were it not for the pandemic. Others have suggested that the economy was faltering with or without the pandemic.
 
I agree, the stock market is not the economy.
 
oneill225 said:
I did not come up with the 9% number, the Fed did. My point is that very few were predicting 9% at the end of the year just three weeks ago when we were supposed to hit 20% unemployment.

I think unemployment will be even lower than 9% by the end of the year, but going from 20% to 9% in six months is significant to most people.
Click to expand...
You misunderstood my point. I wasn't quibbling with the idea that unemployment might decline to 9% by years end.... that seems plausible.

We did hit close to 20% unemployment in April after the misclassification errors are adjusted for... 19.4% IIRC..., and if unemployment declines to 9% by year end that will be good, but the economy will still be in the crapper, as will stocks.
 
Last edited:
Last quarter of 2019 also was lower than expected so the economy was trending down.
 
Sunset said:
Are you sure you really want to stay on topic :LOL::LOL:
Click to expand...

Will double down.... The stock market is not the economy. Jobs data, income data, spending, inflation, GDP and consumer confidence are better indicators of economy.

As of now, unemployment/jobs data is at its worst in a generation, household income is notably lower than before COVID as many also took paycuts, overall retail sales down, consumer confidence not great despite $600 extra on unemployment that will go away soon. The state of these may return to Feb levels or may not through next year... or 10+ years. No one knows. The longer it takes for recovery, the higher the chances of a secondary downward snowball effect. There's also global dependency to factor.
 
Last edited:
oneill225 said:
Even 30 million unemployed would amount to less than 10 percent of the US population.
Click to expand...

Seems like an irrelevant number considering a decent portion of the population isn't looking, or capable of working,ie children and the retired. Remove them and you're looking at 20% or more of the working population that's unemployed.
 
garyt said:
Seems like an irrelevant number considering a decent portion of the population isn't looking, or capable of working,ie children and the retired. Remove them and you're looking at 20% or more of the working population that's unemployed.
Click to expand...

I would take it one step further and say that none of the covid-driven employment numbers are relevant in projecting the strength of the US economy. Put differently, the unemployment rate is not the economy.
 
At some point the stock market needs to reflect the economy because the market needs consumers with purchasing power to consume what ever product the company makes.
The other option is for the PEs to get extended like a rubber band and when it goes watch out. The final option is for them to become a monopoly with out any real competition.
 
Status
Not open for further replies.

Similar threads

S
Reconciling micro observations with macro trends? (is the economy really doing well?)
2
Replies
26
Views
2K
Koolau
Koolau
T
Retired 10 years today!
Replies
20
Views
2K
walkinwood
walkinwood
J
  • Locked
Expectations for the US economy
4 5 6
Replies
127
Views
11K
MichaelB
MichaelB
Christine
Contextualizing Today’s Economy with Jeremy Siegel
Replies
8
Views
1K
Koolau
Koolau
S
Year 0 update
Replies
9
Views
1K
Calico
Calico

Latest posts

Back
Top Bottom