Question

There is typically great interest in how the stock market is performing at any given time. The Dow Jones Industrials measure broad market activities among the nation's largest companies. For many people, it is a measure of economic health. Please evaluate the statement, "the stock market is not the economy". Do you agree or disagree? Explain your viewpoint and provide evidence for your position.

Answer 1

the stock market is not the economy because the stock market does not reflect the economic sentiments. it is just driven by liquidity and stimulus which have been provided by Federal Reserve to the large corporates, it is not the adequate reflection of the economy because it can be exampled through the current scenario and it can be seen that when the job and employments are at the record lows, the stock market has recovered almost 40% from The lows so it can be said that stock market is not adequate representation of the economy .in fact it is a speculative play on where the economy will be in a few years.

Stock market is just part of the economy, it's not an indication of where the economy is heading into so if one follows its is stock market for idea of an economy one can get illusive figures because various stock markets performed great, but their economy are into deep trouble.