The stock market is not the economy

"Markets are important to investors, but despite what it might seem from this week’s banner headlines, the day-to-day moves in the Dow neither drive nor necessarily reflect developments in the economy as a whole. A 500-point drop is tough to ignore, though. A while back, I laid out some rules for when ordinary people should pay attention to the stock market. The latest downturn hits pretty much all my requirements: It is sustained, is broad-based and extends far beyond the U.S. On Saturday (before this week’s gyrations, but already well into the January slump), Wall Street Journal columnist Justin Lahart wrote that this isn’t a repeat of 2008. That’s probably true, but it’s also not particularly encouraging. The 2008 financial crisis was the start of a catastrophic economic meltdown — things can be not as bad as 2008 and still be very, very bad." Ben Casselman is Chief Economics Writer at Nate Silver’s FiveThirtyEight.com. See his analysis of the week’s economic news: (VIEW LINK)


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